Question

Background

Imagine that you work for the World Bank and you have been called to Ghana to aid the new president to come up with a new international trade strategy.

You are told that the new government is interested in moving away from agriculture and into manufacturing. To do so, the government wants to pursuit a policy of import substitution industrialization (ISI).

You are given a brief about Ghana highlighting the following points:

• About half of Ghana’s population depends on agriculture, but Ghana still imports some of its food.
• The majority of Ghana's people live in rural areas and exist on a subsistence way of life.
• Ghana has one of the highest rates of income inequality in the world.
• Nearly half of the population is employed in agriculture.

QUESTION   

After a meeting with Ghana’s president you learn that the government is also interested in repatriating migrants that went to European countries to study engineering a decade ago. Explain how this is likely to change Ghana’s comparative advantage. Explaining with International Trade Theory (Stating the name of the theory) and how Ghana's comparative advantages change in which Ghana has lower opportunities cost in producing what products comparing to others countries.

Answer 1

Here we can use the theory of adam smith which is named as the absolute advantage theory which means countries which have an advantage in any kind of production.Here in the case of Ghana they are more suitable in agriculture and also they look towards the industrial sectors which makes their country more developed

Here we can see a case that they have a new plan of import substitution industrialisation here they can import more agricultural equipments which the people in ghana could produce more food for the country there is problem of importing food for the people so,that issue will be solved when the government take initiative that they should focus on what they are best at as the theory states

And also ghana have a comprative advantage than other countries that is the half of the population in ghana is best at agriculture production so they could produce triple or more food than they consume so they can export those foods to other countries and also make other countries to invest there for agro-industrial companies