What would be a response/reply to the following statement below what would be a

Question

What would be a response/reply to the following statement below what would be a comment.

I believe that there are definitely risks involved in making a country decide trade agreements based solely on the law of comparative advantage. There is also a downside to having the global economy completely based on comparative advantage. If that was the case, there would be much lower levels of competition globally, which would most likely cause major price fluctuations. Dependency on specific nations would increase depending on what they produce. This could be very negative in many ways. For example if you were at war with certain countries, you would have no other way to obtain those countries goods. In a perfect world it would probably be great, but it seems like a bad idea practically.

Explanation / Answer

Comparitive advantage is one of the theoritical basis which helps economist to decide the policies regarding the international trade and incentives of certain product's domestic production. Being just one of the factors amongst many it cannot be the only deciding factors. Lets take a example assume a country A which sees that they have high comparitive advantage in production of oranges in comparision to production of steel. Now they shift their complete resources of steel towards oranges and imports steels in exchange of oranges from only other country B in the world. Now if tommorrow there is a political disturbance and both the countries stop trading then country B will survive by eating something else other than oranges which they could produce domestically but country A will face a lot of problems due to lack of steel. So we see that international trading decisions cannot be solely depending upon comparative advantage.

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