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Strategies for Global Value Added: Gains Comparative advantage - page 8 / 30

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What to produce – computers or clothing?

Comparative Advantage asks which country is relatively better at computers than clothing in comparison with the other country

A country should focus more on computers than clothing if transferring resources at the margin from clothing to computers will yield greater returns than doing so in the other country

Correspondingly, the other country should focus more on clothing (transferring some resources from computers to clothing)

There are some costs of transferring resources and adjusting production

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