Nations depend on each other because of unique resources and capabilities.

• Examples:

  • Saudi Arabia → oil

  • Japan → technology

  • Brazil → coffee

A country has an absolute advantage when it can produce a product at a lower cost than any other nation.

Example: Brazil has an absolute advantage in coffee production.

A comparative advantage exists when countries specialize in what they produce most efficiently, even if they could produce other goods too.

• Examples:

  • United States → high-tech products (airplanes, computers, telecommunications).

  • Emerging nations → labor-intensive goods such as clothes, shoes, and toys.

• Consumers: more choices, lower prices, better quality.

• Producers: larger markets, higher sales and profits (e.g., IBM, Heinz, HP).

• Workers: more jobs at home and abroad (Toyota employs over 30,000 Americans).

• Nations: higher living standards, stronger economies, and political alliances.