GEOG 216 Lecture Notes - Lecture 11: Factor Endowment, Absolute Advantage, Comparative Advantage
15 May 2016
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Document Summary
A better understanding with some of the reasons as to why countries trade: Countries rather trade than going independently because the planets resources are uneven. Canada is well endowed in terms of fresh water resources. We need to be trading based on what factors we have. Canada for example has access to fresh water, something saudi arabia doesn"t have. The climate in saskatchewan, comparing it to switzerland where the climate is cooler. In theory, we could grow bananas in nova scotia but it might be difficult. Differences in factor endowments for instance labour force, quantity of labor, also in terms of supply or the skills of the worker itself. Canada compared to vietnam has a high worker abundance. Vietnam had a relative abundance of labour in textile industry, those goods in which it has a relative higher factor of skilled individuals. We can think about capital of a country, infrastructure differences that facilitate industries, technology differences.
