Q9+-+Developement

==== Comparative Advantage occurs when a country is able to produce a good or service at the lowest opportunity cost. With this the maximum output is yielded at lowest cost, and at utmost efficiency. This is important for developing countries, because it allows their economies to rely on an industry or goods or service that only they can produce at maximum efficiency, and thus face less competition for that good in the international market. This allows the developing country to increase trade among developed nations and thus increase economic growth, as shown bellow by the shift in the LRAS to the right. For instance, Bangladesh relies on its garment industry, where they have comparative advantage, to trade for merit goods such as medicine and technology. ====

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==== Nonetheless, comparative advantage can change over time, as technology and resources change. For instance, Bangladesh relies on cotton farms for its garment industry, however, change in whether pattern or natural disasters may make it more expensive to cultivate cotton overtime, thus they may lose out their comparative advantage in the garment industry, due to increased opportunity costs of the industry. At the same time, a country may develop superior technology and machinery that may give them comparative advantage that they didn’t have before, as now they can produce more efficiently and at lower costs that the country that previously held comparative advantage in the market. ====