Economics and Comparitive Advantage in Switzerland
RUNNING HEAD: SWITZERLAND AND COMPARITIVE
Switzerland and Comparative Advantage; Factors, Specialization and Protectionism in a Global Economy
ECO GM/ 561
International Economics
Douglas Gurney
July 3, 2010
Switzerland and the Concept of Comparative Advantage
While most in today’s hyper-competitive global economy look towards countries including; China, India, Taiwan, Vietnam, and others in search of lower production costs seeking the ever illusive comparative advantage, others have different ideas. Switzerland, a tiny land locked nation in central Europe surrounded by Alps with a relatively small population of 7,630,605 is one such country. It operates with its own comparative advantage in the industries of chemical/Pharmaceuticals’ production and export, watch making, chocolate manufacturing, and a strong financial sector. While Switzerland has recognized most of its potential in these areas, one area that of corporate taxation still remains undeveloped.
Comparative Advantage; the Concept and Identifying Factors
As a general rule, comparative advantage is defined as “the principle of comparative advantage refers to the ability of a party (an individual, a firm, or a country) to produce a particular good or service at a lower opportunity cost than another party…” (Investorpedia.com, 2010) Only after all the components of comparative advantage are completely understood is it clear how countries like those of Switzerland compete in today’s market.
The Concept of Comparative Advantage
“In economics, the principle of comparative advantage refers to the ability of a party (an individual, a firm, or a country) to produce a particular good or service at a lower opportunity cost than another party…the advantage a nation has by being able to produce products or services more efficiently and at lower cost than a competitor nation… A situation in which a country, individual, company or region can produce a good at a lower opportunity cost than a
Switzerland and Comparative Advantage; Factors, Specialization and Protectionism in a Global Economy
ECO GM/ 561
International Economics
Douglas Gurney
July 3, 2010
Switzerland and the Concept of Comparative Advantage
While most in today’s hyper-competitive global economy look towards countries including; China, India, Taiwan, Vietnam, and others in search of lower production costs seeking the ever illusive comparative advantage, others have different ideas. Switzerland, a tiny land locked nation in central Europe surrounded by Alps with a relatively small population of 7,630,605 is one such country. It operates with its own comparative advantage in the industries of chemical/Pharmaceuticals’ production and export, watch making, chocolate manufacturing, and a strong financial sector. While Switzerland has recognized most of its potential in these areas, one area that of corporate taxation still remains undeveloped.
Comparative Advantage; the Concept and Identifying Factors
As a general rule, comparative advantage is defined as “the principle of comparative advantage refers to the ability of a party (an individual, a firm, or a country) to produce a particular good or service at a lower opportunity cost than another party…” (Investorpedia.com, 2010) Only after all the components of comparative advantage are completely understood is it clear how countries like those of Switzerland compete in today’s market.
The Concept of Comparative Advantage
“In economics, the principle of comparative advantage refers to the ability of a party (an individual, a firm, or a country) to produce a particular good or service at a lower opportunity cost than another party…the advantage a nation has by being able to produce products or services more efficiently and at lower cost than a competitor nation… A situation in which a country, individual, company or region can produce a good at a lower opportunity cost than a
References: About.ch, (2010) Information about the Economy of Switzerland, http://www.about.ch/economy/index.html, Retrieved; July 5, 2010 Globalization101. Org, (2010) The Theory of Comparative Advantage, http://www.globalization101.org/index.Retrieved; July 5, 2010 LOWTAX.NET, (2010) Switzerland; Domestic Corporate Taxation, http://www.lowtax.net/lowtax/html/jswdctx.htmlRetrieved; July 5, 2010 Investorpedia.com, (2010) Comparative Advantage, http://www.investopedia.com/terms/c/comparativeadvantage.asp, Retrieved; July 3, 2010 World Trade Organization (WTO), (2010) Trade Policy Reviews; Switzerland 1996, http://www.wto.org/english/tratop_e/tpr_e/tp31_e.htm, Retrieved; July 5, 2010