fatvegan

One of the things that pisses me off about the whole "comparative advantage" twaddle, is the earnestness with which people insist that banana picking, for example, really is what a country has comparative advantage in. Look at the statistics, they'll say, it is the best thing for them to do. Invariably the industry they are talking about is the absolute simplest thing one could imagine. Once they've established what a country has comparative advantage in it's like the dicussion is over.

What never seems to come through though, is that for a country with no capitalist tradition that has never tried to participate in industry, then their comparative advantage will always be in the simplest thing you can find. Comparative advantage is determined by the looking at the relative efficiencies of different possible industries, and sitting those numbers next to similar statistics for the rest of the world. So of course a poor country's comparative advantage will be in bananas or rice or coffee. But people often act like it's some revelation.

As I think I have said several times before, just because the logic of comparative advantage tells you to do something, doesn't mean you should.