Comparative Advantage of Natural Resources Japan vs. US
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With reference to Table 15.1, what characteristics of national resources explain the different patterns of comparative advantage for the US and Japan?
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This detailed solution looks at the characteristics of natural resources to explain the different patterns of comparative advantage for the US and Japan, in reference to a table provided by the student (included). It includes examples and links.
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With reference to Table 15.1, what characteristics of national resources explain the different patterns of comparative advantage for the US and Japan?
The characteristics of national resources can be explained by looking at the various product categories and then comparing the geography, population, and resources of the countries. For instance, the United States does relatively well in cereals, compared to Japan, and the other countries. This is due to the size of the country: there is simply more land to grow grains and produce cereals in American than there is in Japan, the UK, Switzerland, or Taiwan. In addition, there are factor conditions for cereal, which include early development of product, and willing farmers as well as a positive government atmosphere towards farmers. There are related and supporting industries involved including a concentration of fertilizer companies, and production facilities. Cereal is in the makeup of the American diet, so there is a national competitive environment, which drives innovation and efficiency. Plus, Americans have the resources to purchase cereal, which increases the strength of the category.
In mineral fuels neither Japan nor the United States have a comparative advantage. Canada does well here. In this case, there is a need for resources in the land (availability), and firms, which would be able to extract and market the product. This might be a case where although the national resource is not available, a firm could still have competitive advantage by transporting and marketing it elsewhere but as yet this has not been the case. Most likely because of the difficulty of transportation and trade barriers.
Neither Japan nor the U.S. has a comparative advantage in pharmaceuticals. In ...
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