The theory of comparative advantage may be applied to a country’s output. Although natural resources within a country may often provide the best opportunity for comparative advantage, certain...

Comparative advantage is one of the fundamental concept of international trade. It is not
possible for a country to have a comparative advantage in producing all goods and services.
Different countries have comparative advantages in different industries thus encouraged to
specialize and exports those goods and services in which they enjoy the comparative
advantage. For example, Costa Rica and Gahan have a comparative advantage in cocoa
production, Japan enjoys comparative advantage in car production and Saudi Arabia has a
comparative advantage in oil production. Australia is one of such country that has
significantly shifted their focus and undergoing enormous structural transformation. Australia
has enjoyed comparative advantage on natural resources and mining for a longer period. But
due to fall in global commodity prices and China’s slowdown,...