Many countries in sub-Saharan Africa have very low labor productivity in many sectors, for example in manufacturing and agriculture. They often despair of even trying to attempt to build their industries unless it is done in an autarkic context, behind protectionist walls because they do not believe they can compete with more productive industries abroad. Discuss this issue in the context of the Ricardian model of comparative advantage.

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Business

Nehemiah Bailey

9 October, 15:28

Many countries in sub-Saharan Africa have very low labor productivity in many sectors, for example in manufacturing and agriculture. They often despair of even trying to attempt to build their industries unless it is done in an autarkic context, behind protectionist walls because they do not believe they can compete with more productive industries abroad. Discuss this issue in the context of the Ricardian model of comparative advantage.

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Katherine · Answer 1

The government of those countries are using a very common argument in favour of protectionism, and that is the infant industry argument.

They are saying that the only way a domestic industry can emerge, is by closing it off from foreign competition, until it becomes so strong that it can compete.

In the Ricardian Model, this view would be incorrect because the governments are not taking advatange of their countries comparative advantage. Under a Ricardian Model, no matter how poor the country is, if it specializes in the sectors where it has a comparative advantage, and imports the rest, it will make allow its citizens to consume more goods and services.