Comparative Advantage

Comparative advantage refers to the relative advantages of an individual (place, city or region) compared with other individuals (place, city or regions) in terms of resource endowment, economic activities or social capital. The comparative advantage of market players can increase market share, increase cooperation opportunities, reduce costs and improve profit margins. With the development of society and the transformation of economic growth mode, the comparative advantage formed by innate factor endowment will gradually decrease, and its role and status will gradually decline; the comparative advantage of higher added value formed by learning and innovation will gradually enlarge, and its role and status will gradually increase. In the era of smart economy, the comparative advantage of higher added value formed by learning and innovation will become the dominant comparative advantage. Developing countries should accumulate higher value-added comparative advantages through innovation, transform comparative advantages into both competitive advantages and cooperative advantages, and achieve new development.

Edited and translated by Zhang Yifei