Business Economics And Management

Running head: BUSINESS ECONOMICS
BUSINESS ECONOMICS
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BUSINESS ECONOMICS1
Overview of the chosen country
The economy of Columbia has successfully grown over the last decade. It is renowned as
the fourth largest economy in Latin America in terms of Gross Domestic Product. The current
growth rate of Columbia is about 0.5 percent and rate of unemployment has decreased
effectively due to a rise in consumer demand and inflation rate (Mian, Sufi and Trebbi 2015).
Absolute or comparative advantage
Absolute advantage is achieved when an economy is able to produce goods by using
same or fewer resources in lesser time than the other economies. Comparative advantage is
gained by an economy when an economy produces goods at a lower opportunity cost or price as
compared to its competitors.
The climate of Columbia is effective for the cultivation of coffee and serves as the
greatest source for rural employment. On an average, Columbia produces over 11.5 million bags
of coffee. It is the second biggest coffee producer in the world. Coffee plants are planted at an
altitude of 6,400 feet that gives them an absolute advantage in coffee production (Zhu, So and
Hudson 2017). The economy has over 940,000 hectares of coffee farming area that has fertile
and volcanic soil with a suitable temperature of 46-75 Farenheight.
Coffee is produced by small run family farms that uses 100 percent Ababica beans. The
coffee produced is rich is quality that is not found in large corporate firm (Valencia et al. 2015).
This makes the coffee market effective for international trade. Columbian coffee has a high
consumer demand in the international market that has improved the Columbian export market.
Coffee comprise of 8.1 percent of the total exports which generates about 30.2 billion dollars.