Question

Can a nation’s comparative advantage change over time? What factors would make it change?

Short answer

Nation's comparative advantage change over time with certain important factors.

Step-by-step solution

Step 1. Meaning of comparative advantage.

The ability to produce a product at a relatively lower cost or to produce a higher quantity at the same cost is known as absolute advantage. While, the ability to produce at a realtively lower opportunity cost is known as competitive advantage.

Step 2. Nation's comparative advantage.

Basically, a nations' comparative advantage can change over time if it acquires efficiency in the production of a good or services due to technological and or social changes.

Step 3. Important factors that result into change in comparative advantage.

a) Geographical diversity.

b) Tradition.

c) Productivity Differences.

d) Technology.

e) Human skills.

f) Product life cycle.