Economics Terms A-Z
Having the comparative advantage (if, for example, you are a business) means that you can produce a good or service at a relatively lower cost than that of your competitors. Having the comparative advantage means you will be able to sell your goods for a lower cost than your competitors and potentially perform better. (‘Cost’ here refers to opportunity cost, not just monetary cost.) Comparative advantage is often used in reference to nations, where trading with a particular country may not result in the best product being purchased, but its purchase can be made at the lowest opportunity cost.
The theory was initially laid out in its classical form by economist David Ricardo in the 1700s. He argued then that, rather than England producing wine (for which the country didn’t have the correct climate) and Portugal cloth (for which it didn’t have adequate manufacturing capabilities), the two countries should simply stop making these products and trade what they could more easily make with each other at mutual benefit. Comparative advantage differentiates itself from absolute advantage, which says that some countries are able to do things significantly more efficiently than others. However, this doesn’t necessarily offer comparative advantage, as trading opportunity costs must also be taken into account.
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Four years ago, the world adopted an ambitious set of Sustainable Development Goals (SDGs) designed ‘to end poverty, protect the planet and ensure that all people enjoy peace and prosperity by 2030’. Despite rising life expectancy and the eradication of many endemic diseases, more than 400 million people in the member states of the Islamic Development Bank (IsDB) still live in absolute poverty, subsisting on less than US$1.90 per day. It is, perhaps, these countries that face the greatest challenges in fulfilling the SDGs.
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Coronavirus has had a broad impact on the global economy. Particularly affected were the tourism, trade and industrial sectors, including the export and import markets. Demand for and consumption of goods decreased, and so did the international freight transport sector. The COVID-19 crisis continues to severely affect the container transport market and the current economic situation gives no hope for short-term recovery.
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Before you start considering what crazy lucrative job you are going to get with your economics degree, consider this fact: a lot of rich people don’t like their money. Many complain about not knowing what to do with it all, yet simultaneously having huge anxiety they’ll lose it. They moan about their friends treating them like walking bank accounts, being judged for not looking the part, and no longer being able to visit - how to put it delicately? - less refined establishments.