Discuss the likelihood of an emerging country enjoying an absolute advantage, comparative advantage.

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

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I assume that you are using the term "emerging countries" to refer to countries that are no longer rapidly industrializing.  These would be countries like China and Brazil that have become quite industrialized and are no longer really seen as "developing," but which have not achieved true "rich nation" status.

Such countries may still have absolute advantages in some areas.  This will depend largely on their natural advantages and on any advantages it has acquired while industrializating.  For example, China has a natural advantage in some areas because it has large deposits of the "rare earths" needed for many electronics.  It may also have acquired expertise in certain areas of manufacturing as it has developed.

However, such countries are in danger of falling into a "middle income trap" where they lose their comparative advantage in manufacturing.  These countries experience wage growth and have workers who are better trained than those in developing countries.  This means that the opportunity costs of specializing in low-skilled manufacturing in such countries will rise.  The countries will then have to find some other comparative advantage to avoid stagnating at the "emerging" level.

Emerging countries, then, may still have absolute advantages, but may be struggling to find new comparative advantages as the opportunity costs of manufacturing rise.

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