Quick Answer: Does China have a comparative advantage in high technology goods?

The overall comparative advantage of China’s exports in the US market is weaker than that in the world market, the comparative advantage of MT and HT products in the world market are significantly greater than that in the US market, but the comparative advantage of LT products is nearly equivalent in both markets.

What is China’s comparative advantage?

The model predicts that China has a comparative advantage in heavy goods in nearby markets, and lighter goods in more distant markets. This theory motivates a simple empirical prediction: within a product, China’s export unit values should be increasing in distance.

Does China have a comparative advantage over the US?

By looking deeply into each country’s bilateral trade, it is not surprising that China has a comparative advantage in labor-intensive goods while the United States has a comparative advantage in the production of high-tech machinery.

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How does technology affect comparative advantage?

As countries and industries converge to the technology frontier, comparative advantage and the gains from trade weaken. Conversely, if countries and industries become more dissimilar from the technology frontier, comparative advantage strengthens and the welfare gains from trade are larger.

Does China’s have the comparative advantage in manufacturing industries?

First, the authors found that types of Chinese manufactured products with comparative advantage in both world and US markets are increasing. … Third, as a whole, Chinese manufactured exports are of greater comparative advantage in the world market than in the US market.

Why does China have a comparative advantage over the US in the production of televisions?

Which country has the comparative advantage in TV? China has the comparative advantage because its opportunity cost (2 TVs per shirt) is less than India’s (4 TVs per shirt). Explain why these countries can benefit from trade. Both are able to increase their consumption of TVs and shirts due to trade.

Does China have a comparative or absolute advantage?

China and Consumer Electronics: Many consumer electronics are manufactured in China. China can produce such goods more efficiently, which gives it an absolute advantage relative to many countries.

How does China benefit from the US?

America’s 11th-largest export market in 2000, China has grown to become the third-largest destination for American goods and services. US exports to China directly and indirectly supported 1.8 million new jobs and $165 billion in GDP in 2015.

Why does US rely on China?

The U.S. depends heavily on China for providing the low-cost goods that enable income-constrained American consumers to make ends meet. The U.S. also depends on China to support its own exports; next to Mexico and Canada, China is America’s third largest and by far its most rapidly growing major export market.

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What countries have comparative advantage?

For example Ireland has a comparative advantage in cheese and butter due to climate and a large amount of land suitable for dairy cows. China has a comparative advantage in electronics because it has an abundance of labor.

How do countries know when they have a comparative advantage in the production of a good?

Countries have a comparative advantage in production when they can produce a good or service at a lower opportunity cost than other producers. Countries are better off if they specialize in producing the goods for which they have a comparative advantage.

What is an example of a country with a comparative advantage?

A contemporary example: China’s comparative advantage with the United States is in the form of cheap labor. Chinese workers produce simple consumer goods at a much lower opportunity cost. The United States’ comparative advantage is in specialized, capital-intensive labor.

What is the difference between technological and technical?

is that technological is of, relating to, involving or caused by technology, especially modern scientific technology while technical is of or pertaining to the useful or mechanic arts, or to any academic, legal, science, engineering, business, or the like terminology with specific and precise meaning or (frequently, as …

How technology will help in international trade industry?

Technological improvements have the potential to increase efficiency and open up new markets. Technologies such as artificial intelligence (AI) and blockchain will impact the future of trade as these advancements can vastly improve the aggregate supply for many industries, promoting lower prices and higher output.

What are the reasons that countries trade?

The five main reasons international trade takes place are differences in technology, differences in resource endowments, differences in demand, the presence of economies of scale, and the presence of government policies.

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