Advantage/International Business

Advantage/International Business

Key Term and Interest in Key Term

The key term for this individual study is absolute advantage. The key term absolute advantage sparks my interest as a result of the significance that it has in both local and international trade. I am interested in conducting further research on this key term and any other concept related to it owing to the gain in trade that a comprehension of the idea of absolute advantage can have on a country’s trade. In the world of business, having an absolute advantage over a competitor means that one can be more profitable than their competitor. As such, it is significant to have a thorough understanding of this concept if one needs to be productive and remain competitive (Rozo, 2017).

Explanation of Key Term

In the field of business and trade, a person or economy is considered to be having absolute advantage over someone else or a company if such a person is best at doing something (Dildar, 2018). The same concept applies to international trade amongst countries. One country is considered to be having an absolute advantage over the other if the given country produces specific goods at a considerably lower resource than the other country. As such, in the field of economics, the proposition of absolute advantage relates to the individual capability of one party in a competition to manufacture a relatively more exceptional quality and quantity of goods and services than the other using a less or equal amount of resources.

Major Article Summary

Seretis & Tsaliki (2016) seeks to give the reader an experimental approach to the concept of absolute advantage. The author achieves this by explaining the principle of absolute advantage in relation to international trade (Seretis & Tsaliki, 2016) in their article, the authors proceeds to show that various variances in productivity might result to a transfer of value to the individual unit of capital via a transfer of value to the particular unit of capital via an absolute advantage in production. In their example of international trade, the author explains that one country might be categorized as having an absolute advantage when it to the production of goods over another state if the individual state produces goods utilizing relatively lower resources than its competitor. In the case of international trade amongst trading nations, absolute advantage might exist as a result of the nation’s national endowment. The model that the author uses to inform their argument is based on the Marxian/Classical model of value and competition.

The author furthermore continues to show the differences that exist between absolute advantage and comparative advantage in both global and local trade. Seretis and Tsaliki (2016) explain that the significant difference that exists between absolute advantage and comparative advantage in international trade is the fact that a country’s comparative advantage is measured by the country’s ability to produce goods at a lower production cost than its competitors. The author furthermore explains that it is practically difficult for any country to have both a comparative advantage and absolute advantage in the production of goods when international trade is concerned. Unlike an absolute advantage, a nation or economy that has a comparative advantage over the other has the potential of selling its goods and services at a significantly lower price than its competition. Most importantly, such an economy or company has the potential to realize relatively more substantial margins in sales (Seretis & Tsaliki, 2016).

Discussion

The article by Seretis and Tsaliki relates to the concept of absolute advantage, comparative advantage, and international trade in that it discourses all the different assumptions that underline the idea of absolute advantage and related theories. The article in itself relates to the content of the assigned module, given that it expounds on the concept of international business and advantage in business. Absolute advantage is best suited when discussing matters that concern international trade and any other concept related to an advantage in business (Lombardozzi, 2019). The article by Seretis and Tsaliki substantially expounds on the ideas of international trade and how advantage in business determine the profitability of a specific company or economy in comparison to another that has a relatively lower advantage. The advantage that the author describes is both absolute advantage and comparative advantage.

Like all the other scholarly articles, the article by Seretis and Tsaliki expounds and elaborates on the concept of international trade and how given economies and companies have an advantage when compared to the others. The different articles examine and explain the benefits that one country has to the other in both absolute and comparative advantage. The terms absolute advantage and comparative advantage dramatically varies depending on the state that the article is discoursing. The different authors argue that both absolute advantage and comparative advantage in international trade significantly influence the development, transformation, and the political economy of various nations (Argarwal, 2020).  All of the articles relate to each other in that they use an empirical model to define and elaborate on the concept of international trade in relation to the principles of absolute advantage and comparative advantage.

References

Argarwal, P. (2020). Absolute advantage. Intelligent economist. Economic Theory & News. https://www.intelligenteconomist.com/absolute-advantage/

Dildar, Y. (2018). Book review: South-south trade and finance in the twenty-first century: Rise of the south or a second significant divergence. Review of Radical Political Economics, 51(2), 336-339. https://doi.org/10.1177/0486613418782775

Lombardozzi, L. (2019). Book review/Essay: Transition economies: Transformation, development, and society in Eastern Europe and the former Soviet Union. Review of Radical Political Economics, 048661341987324. https://doi.org/10.1177/0486613419873243

Rozo, C. A. (2017). Book review: Neither free trade nor protection: A critical political economy of trade theory and practice. Review of Radical Political Economics, 50(1), 213-215. https://doi.org/10.1177/0486613416670969

Seretis, S. A., & Tsaliki, P. V. (2016). Absolute advantage and international trade. Review of Radical Political Economics, 48(3), 438-451. https://doi.org/10.1177/0486613415603160