Understanding Absolute and Comparative Advantage in Singapore
School
Nanyang Technological University**We aren't endorsed by this school
Course
SHIPPING E MISC
Subject
Economics
Date
Dec 12, 2024
Pages
1
Uploaded by DeaconBaboon4951
Explain in more details the concepts of absolute advantage and comparative advantage. Cite some good examples to illustrate these 2 concepts, preferably in the context of Singapore.Absolute Advantagesrefers to a commodity that one country has in exportable quantities which another country has none either because of climate or geology. Using the context of Singapore. Singapore’s port and trade. Singapore is strategically located at the crossroads of major shipping routes, giving it advantages to trade and logistics. Its port one of the busiest in the world, allows it to efficiently manage a high volume of international cargo.-Using fewer inputs or a more efficient process to create goods or services at a lower total cost per unit-the ability of an individual, company, or country to produce a good or service at a lower cost than any competitor, oroproduce more of something using the same amount of resourcesComparative Advantagerefer to one country produces a commodity more cheaply or in a more desirable form than another either because of climate or geology.In the context of Singapore, Singapore has a strong manufacturing sector. Despite high labour costs compared to neighbouring countries, Singapore’s comparative advantage comesfrom its high productivity, advanced technology, and the ability to produce complex components that require precision and expertise.Its investment in education and skills development can be another which gives it a comparative advantage in producing high tech services and knowledge-based industries. This opportunity cost of producing highly skilled labour is lower in Singapore than in other countries with less focus in education.-The ability of an individual, company, or country to produce a good or service at a lower opportunitycost than itscompetitors
