Question

Theories of absolute and comparative advantage contribute to the interpretation of the international trade process. With that in mind, here are some examples of products where you can implement an absolute and comparative advantage in every country you are commissioned to study

Clothing

Salt

Gems

Olive oil

gone Discuss the possibility of Italy having an absolute advantage, a comparative advantage, or a lack of a specific advantage for each product

Answer 1

*Clothing - comparative advantage

Clothing is produced all over the world.However in ltaly , clothing and fashion industry contribute significantly to the industrial output. Italian brands are liked world wide. Cost of production is also low. Italy has comparative advantage in the case of clothes.

* Salt - comparative advantage.

Italian salt is produced from the low waters. In earlier times, it formed a large part of ltaly's trade and efforts have been made now for the revival of traditional salt production. ltaly has clean sea water providing a comparative advantage to it in the production and export of salt.

Gems

Italy has been exporting gems from countries like India and srilanka. Infact, it's a great market for other countries who Export gems due to high demand. Thus ltaly has no specific advantage in the case of gems.

* Olive oil - comparative advantage.

Italy is one of the dominant player in olive oil Market. It accounts for around 20 percent of the olive oil exports in the world.ltaly has second place in olive production in the world. It focuses on organic farming too. Availability of olives in large quantity provides Italy with a comparative advantage in the case of olive oil.

---