Comparative Advantage Essay Example | Topics and Well Written Essays - 500 words - 3

Comparative Advantage - Essay Example This is probably not true for Japan because agriculture land is not massively available for cultivation in the country. Japan and Unites States have no comparative advantage in mineral fuels, pharmaceuticals, and apparel. Both countries have shortage of mineral fuel reserves and this is why they cannot export or neither fulfills all its energy needs. Pharmaceutical industry of United States is stronger than Japan but neither country has any comparative advantage in these industries. Both the countries have developed enough therefore they have no more labor intensive industry and this is why textile industry is not a comparative advantage for Japan and United States of America. Japan has competitive advantage in automotive industry and this is because of the innovative and technological capital of the country. Japanese automotive companies are famous all over the world for the quality of their product. Automobile industry started to grow in early 20th century in Japan and therefore the foundations of the industry were strong. Today, Japanese industry is ranked third all over the world in the automotive sector (BBC, 2012). United States enjoyed comparative advantage initially but later on lost to Japan, China, and Germany. On the other hand, United States has an extremely developed aerospace industry compared to Japan. The comparative advantage of United States in the aerospace industry is mainly due to large domestic consumer base and highly advanced military sector. This bolstered the aerospace industry of United States and gave the country comparative advantage over other countries. Electronics equipment is an area where Japan is well known all over the world. Again the intellectual and technological infrastructure the country has gives rise to the strength of the country in the sector. Electronics and electrical equipment are built on a large scale in Japan and are exported all over the world. Strong competition within Japan is contributed towards a strong