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Therefore, a country which is able to produce one good with a lower opportunity cost than another country, should specialize in producing that good which will turn into a competitive advantage.
However, when assessing this theory at the level of international trade, it is harder to depict the competitive advantages. The model may seem to be unrealistic. The resources employed in real world are not restrained to labor and the markets in which the goods are supplied are not perfectly competitive. Moreover, there may be countries able to specialize in the production of one or several goods and other countries unable to find any competitive advantage. Other disadvantages are the ones assembled when trying to form a general framework of the labor costs. Due to the fact that these costs are similar within the boundaries of a certain country and vary from one country to another, it is problematical to compute them. A matter easier to assess is the technology used by each of the countries. In this domain, those who make use of more efficient and improved technology are likely to gain a competitive advantage.
John Mill gave a rational shift of form to Ricardo's approach "in which the labor cost coefficients were interpreted as the amounts used in a unit of each good produced rather than Ricardo's labor cost of producing the amounts contained in a typical trading bundle" (David Ricardo's Discovery of Comparative Advantage). Thus, Mill considered that in order to compute the competitive advantage, the countries should take into consideration all aspects related to the production and not to use only the labor costs. This method is more appropriate and closer related to the real life situation.
Q4. Is Thomas Malthus's Theory of Population relevant today? Could today's worries about environmental damage be used to justify Malthus's ideas? Compare Malthus's ideas with those of the late economist, Julian Simon.
In his famous essay entitled "Essay on Population," Malthus put forward the idea that, with the increase in the population number, the food resources will become insufficient in order to ensure the survival of all the population. Thus, his suggestion was based on the fact that "(unchecked) population growth always exceeds the growth of means of subsistence. Actual (checked) population growth is kept in line with food supply growth by "positive checks" (starvation, disease and the like, elevating the death rate) and "preventive checks" (i.e. postponement of marriage, etc. that keep down the birthrate), both of which are characterized by "misery and vice" (Thomas Robert Malthus, 1766-1834). Moreover, the natural propensity of the population to break the limit of the food supplies will never cease. "Because of this tendency, any attempt to ameliorate the condition of the lower classes by increasing their incomes or improving agricultural productivity would be fruitless, as the extra means of subsistence would be completely absorbed by an induced boost in population. As long as this tendency remains, Malthus argued, the "perfectibility" of society will always be out of reach" (Thomas Robert Malthus, 1766-1834).
However, in order to avoid the pessimistic results of his theory, Malthus explained that if the social classes were to be educated, then the scarcity of the resources wouldn't pose such a problem. He invoked the restraining of the needs and the strive to fulfill them using as few resources as possible. The direction toward which the essay was primarily addressed was the working class. Thus, people tended to hate Malthus' ideas and to resent him as well.
As the statistics about the global population show, the world population is continually increasing but with a decreasing rate. Thus, there should be a lively preoccupation about the future. The scientific tests and their results have sometimes led to negative effects upon the environment. This is the reason why nowadays scientists are doing their best in order to ensure a safe environment for the future generations. As an example, people are encouraged to use alternative energy sources. These technologies have not been widely developed yet, but the aim is to promote them within the world.
On the other side, in the view of Julian Simon, the growth of the population has a positive impact upon the environment. The results of the scientific researches made state that "Because human knowledge allows us to produce more finished products out of fewer raw materials, natural resources are becoming more available. The air and water in rich countries are becoming cleaner. Most importantly, human beings are living much longer than ever before [...] the common-sensical Malthusian view sees only the short-term rather than the long-term. But in the long-term these adjustment processes tend to produce opposite results to what the short-term results happen to be" (Population Growth Benefits the Environment).
In addition to that, his vision is based on the statistics that countries which have a higher population density (such as Holland, Japan etc.) have a faster growth rate than those less densely populated (such as the ones located in Africa). When taking into account the life expectancy, it is higher in the developed countries and decreased in the poor ones.
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