Comparartive advantage & Investment

[Omarion]

Due to comparative advantage in some products or factors of production may lead a company to open a branch in other countries other than the home country. So these companies are facilitated by the offshore banking. In this way the companies are encouraged to make an investment in other countries to get more cost effective production process.

[HarlinMiller]

Dynamic comparative advantage theory professor at Hitotsubashi University of Japan Kiyoshi Kojima (Kiyoshi Kojima) proposed, also known as the marginal production expansion theory, it is based on Japan's foreign direct investment made in the background. The theory aside from the microscopic point of view to explain the traditional way of foreign investment, turning from a macro perspective. The core of the theory, foreign direct investment has been or will be from their comparative disadvantage in the industry in turn, the host of these industries is obvious and potential comparative advantage sector. If there are no multinational corporations to bring capital, technology and management experience, the host country can not be played on these advantages. Thus, investment in foreign direct investment the country can take full advantage of the comparative advantages of host countries and to expand bilateral trade. Theory of comparative advantage explains the 60,70 20th century, the characteristics of Japanese foreign direct investment, mainly resource-oriented, labor cost-oriented and market-oriented direct investment. Described to occur in Asia, Japan - "Four Little Dragons" - ASEAN - China - Vietnam, the order of the direct investment and industrial structure adjustment, the so-called "flying geese model", but the development of the theory underestimates the ability of countries to accept high-tech enterprises in developing countries do not have guidance.

[FuscoGiulia]

It has the lowest opportunity cost to produce that good.It might be because abundant of the resources suitable to produce that good.The factor price will be low compared to other countries.But comparative can be manipulated. Such as an increase in human capital faster than any nation.