[Related to the Don’t Let This Happen to You on page 51]
A columnist for Forbes argues, “Even if China is always better than Spain at producing textiles, if the best thing that
Spain could be doing is textiles, then that’s what Spain
should be doing.”
a. What does the columnist mean by “China is always
better than Spain” in producing textiles (which include
clothing, sheets, and similar products)? Was the columnist arguing that China has an absolute advantage
over Spain in producing textiles, a comparative advantage, or both? Briefly explain.
b. The columnist noted that, in fact, Spain exports significant quantities of textiles. If his description of the
situation in China and Spain is accurate, briefly explain
how Spanish firms are able to export textiles in competition with Chinese firms.
Source: Tim Worstall, “Inditex’s Zara and the Power of Comparative
Advantage,” forbes.com, July 7, 2015.