India's Comparative Advantage in International Trade

Running Head: ECONOMICS 1
International Relation & Global Economy
Institutional Affiliation
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ECONOMICS 2
Introduction
The selected country under the study is India. The ideology of comparative advantage
was propounded by the classical economist known as ‘David Ricardo’ in 1817. It is believed that
the existence of comparative advantage occurs in the country with the superiority margin in
production. This is elaborated with the lower marginal costs of production. Most of the countries
often export and specialize in products that intensively use the factor inputs which are endowed
abundantly (Hayes, 2019) In this case, each and every country specializes in an activity where it
has got the advantage. This therefore leads to the national income to increase, thus, leading to the
increment of efficiency allocation of resources and welfare.
India’s Comparative Advantage
The economies of Asian Countries are dynamic, India inclusive and these have majored
in exporting of manufactured goods. The manufactured goods are exported at low costs thus
taking advantage about the high unit of labor costs (Hayes, 2019). It is evident that, most
countries’ comparative advantage shifts in relation to specializing in exportation and production
of high valued manufactured goods. Most significant is that, India has become a country that is
more open over the previous years as studies suggest (Riley, 2012). However, the ‘revealed
comparative advantage’ about India can be illustrated using her exports and balances of trade
especially in business services such as iron ore, green energy among others.
The sources and challenges of comparative advantage to India