Comparative and Competitive Advantage

• free trade refers to the relative absence of restrictions to the flow of goods and services between nations
• comparative advantage describes superior features of a nation that provide unique benefits in global competition
• comparative advantages typically derive from either natural endowments or deliberate national policies
• comparative advantage is also known as country specific advantage
• comparative advantage includes labor, climate, arable land, petroleum reserves and other inherited resources such as those enjoyed by countries in the Middle East
• other types of comparative advantage are acquired over time such as entrepreneurial orientation, availability of venture capital, and innovative capacity
• comparative advantage is an economy's ability to produce a particular good or service at a lower opportunity cost than its trading partners
• competitive advantage refers to assets and capabilities of a company that are difficult for competitors to imitate
• competitive advantages help firms enter and succeed in foreign markets
• competitive advantage takes various forms such as specific knowledge, competencies, innovativeness, superior strategies, or close relationships with suppliers
• competitive advantage is also known as firm specific advantage
• in recent years, business executives and scholars have used competitive advantage to refer to advantages possessed by nations and individual firms in international trade and investment