What Is the Theory of Comparative Advantage?

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What is the theory of comparative advantage?
What is the theory of comparative advantage?
International trade began at long time ago and it influences our life and economic. The reason why people have motivation to trade to others countries are because: the theory of comparative advantage, the imperfect markets theory and the product cycle theory. The idea of comparative advantage has been first mentioned in Adam Smith’s and then it was studies deep and detail by David Ricardo. In his opinion, the foundation of the international trade is base on diversity of production technology and the diversity of the cost. For developing countries economic, people should concentrate to manufacture and export the goods which have own country’s advantage. However, they should import the produce which their country’s lack aspect. When a country specializes in some products, it may not produce other products or base on some country’s environment that lacks some natural energy. The theory of comparative advantage can make two countries get two win in the trade and can promote international trade. Analysis the international trade between China and Angola under the theory of comparative advantage Chinese economy current situation and relative advantage aspect Chinese booming economy, which has averaged annual 9 percent growth for the last two decades, requires massive levels of energy to sustain its growth. Though China relies on coal for most of its energy needs, it is the second-largest consumer of oil in the world behind the United States. Once china is the largest oil exporter in Asia, but now it became a net importer of oil in 1993. The International Energy Agency projects China's net oil imports will jump to 13.1 million barrels per day by 2030 from 3.5 million barrels per day in 2006. China currently imports about half its oil supplies from the Middle East, and that percentage is projected to grow in coming decades. Yet the extent of the country's energy demand has also...
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