actually...i also dunno what to blog...im just itchin to type something...

A country is said to have comparative advantage in the production of commodity when it produces a good at a lower opportunity cost than another country

the theory of comparative advantage can be used to explain the world trade between singapore and the rest of the world. Singapore has good infrastucture, stable govt, consistent economic policies, well educated labour force and this gives singapore a CA in high value tertiary industries. for eg, singapore has a CA in shippin in east asia region due to its good geographical location, deep sheltered habour, highly computerised container port, high connectivity. this means that ships n traders find it cost effective to engage in the service of singapore habour. singapore also has comparative adv. in high value manufacturing industries as such engineering, chemical and biomedical sciences. this allows singapore to export a range of consumer goods, capital equipment and financial and business services.

however, singapore has comparative disadv. in labour intensive and natural resource intensive industries due to its small population and little natural resources.

the pattern n direction of trade in singapore to a large extent is dictated by the theory of CA. however, politcal and social conditions can influence trade. for instance, singapore govt can ban certain imports such as drugs or pornographic materials

Advantages of trade
1. advantages of large scale production.
country is able to enjoy a lower unit cost because it is producing for a larger market. these cost reduction is passed onto consumers in e form of lower prices.

2.greater efficiency and innovation
when country trade, it becomes more efficient as it can produce more with the same amt of resources. competition from import stimulates greater R & D and hence promote innovation. extra competition also prevent large firms from chargin at a higher price. allow consumers to enjoy better quality of goods at lower prices.

3. increase in consumer welfare
enjoy a wider range of goods and services. countries can produce at a point outside ppc. combinations of goods tat were previously unattainable for productn n consumption are now attainable with international trade. hence enhances consumer welfare.

4.economic growth
trade stimulates growth as exports generate greater production, employment and income. strong trade link facilitae tech. transfer from developed to developing countries leading to faster economic growth. ppl enjoy higher standard of living.

Disadvantage of trade
1. economic fluctuations
international trade makes a country vulnerable to sudden changes in demand or supply. for instance, malaysia specialises and trade only in rubber, but if theres a drastic fall in world demand, will result in massive umployment. hence mux haf a diversified econmy even though it clearly has a CA in rubber

2. exhaustion of natural resouces
international trade can cause rapid exhaustion of resources like mineral deposits. it will haf an adverse effect on productive capacity of e country in the long run.

3. unfair practices
rivarly results in unfair trade practices. for eg, country may dump its surplus output into an importin country at prices below marginal cost of production. dumpin will wipe out dd for domestic goods n create unemployment.

okie..hands are tired....im off to more memorisin work....grrrrrrrrrr..........