The theory of comparative advantage states that there are gains from trade if countries specialize and optimize their opportunity costs. why is comparative advantage a driving force behind trade behind trade between regions and countries? why does specialization lead to welfare improvement? why engaging in trade is better than trying to be self-sufficient?

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Matias Graves

2 October, 10:00

The theory of comparative advantage states that there are gains from trade if countries specialize and optimize their opportunity costs. why is comparative advantage a driving force behind trade behind trade between regions and countries? why does specialization lead to welfare improvement? why engaging in trade is better than trying to be self-sufficient?

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Kristian Crosby · Answer 1

In simpler terms, the theory of comparative advantage refers to the possibility of one given economic actor to produce the same good which is of the same size and quality. This becomes a force behind trade because there are specific materials that are found in specific area in the Philippines only.

Doing trading is I think is better than being self-sufficient.