Answer to Question #228091 in Microeconomics for Ben

Question

Give at least 6 examples of comparative advantage and 6 examples of absolute advantage here in the Philippines using your own words.

Answer 1

Absolute advantage refers to the ability of a country to produce certain goods better and in high quantities than another country. The Philippines has an absolute advantage in the production of agricultural products such as; Coconuts, the fact that it is the largest producer of coconuts in the world. Secondly, the production of bananas is the 2nd largest world exporter of bananas; hence it has the absolute advantage in bananas in any other country other than Ecuador. Thirdly, production of Pineapples since it is the second-largest producer worldwide after Costa Rica. Fourthly, the production of chocolates since its Malagos chocolates has become one of their kind of chocolate in the world. It won the Silver Award at the Chocolate Competition in Germany for its tree-to-bark unsweetened chocolate made from pure cacao beans giving an absolute advantage. Fifthly, the production of mangoes since the country's mango is famous for its quality and sweetness, known worldwide as the best tasting variety of carabao mangoes, offering an absolute advantage. Lastly, it has absolute advantage in the production of manila papers as they are globally recognized papers known for their durability, giving it an absolute advantage over other nations.

On the other hand, comparative advantage refers to the ability of a country to produce goods at lower opportunity costs than the other country. The Philippines has a comparative advantage in the production of; human-intensive industries due to its large population compared to countries like Japan and Korea that have a comparative advantage in technology-intensive industries. Secondly, the country has a comparative advantage in experts. The country has a high number of educated people for multinational companies looking to outsource jobs in a foreign country. Thirdly, it is a comparative advantage in rice production. Government control of exports puts a barrier between the world and domestic markets so that world quality premiums are not reflected in domestic prices.