Business
A person has a comparative advantage at producing something if he can produce it at lower cost than anyone else
A person has a comparative advantage at producing something if he can produce it at lower cost than anyone else
Author:
James - http://www.saaicom.com
A person has a comparative advantage at producing something if he can produce it at lower cost than anyone else - this is what i remember of studying this as part of macro economics during my intermediate college, graduation and of course as part of my Management graduation. So the point I am trying to make is that the outsourcing or I would like to call it as comparative advantage is not a new concept and definitely not correct on anybodies part to complain that it has eaten up their job. If that is the case so, I should cry against Africa for eating up jobs from other countries in the jewelry industry, cry against the Japan for eating up jobs in technology industry and of course the Germany for eating up the engineering and engineering research industry jobs.
So as said by David Ricardo, the growth would not come from fighting against the comparative advantage (so called outsourcing) but would come from taking advantage of it and using it for ones benefit. One example that makes it more clear is as follows:
To produce the wine in Portugal, might require only the labour of 80 men for one year, and to produce the cloth in the same country, might require the labour of 90 men for the same time. It would therefore be advantageous for her to export wine in exchange for cloth. This exchange might even take place, notwithstanding that the commodity imported by Portugal could be produced there with less labour than in England. Though she could make the cloth with the labour of 90 men, she would import it from a country where it required the labour of 100 men to produce it, because it would be advantageous to her rather to employ her capital in the production of wine, for which she would obtain more cloth from England, than she could produce by diverting a portion of her capital from the cultivation of vines to the manufacture of cloth. [par. 7.16 (See also pars. 7.13-7.15)]
Grown companies like Microsoft, IBM, Oracle and many others have actually grown taking comparative advantage of technology and cost benefit of India by intelligently employing their capital resources. So it is practically proved once again even in the modern economy that the people / companies who would take comparative advantage (so called outsourcing) would grow rapidly than their opposite counter parts . . .
James
http://www.saaicom.com
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