Comparative Advantage Emerging Economies | Comparative Advantage

Comparative Advantage Emerging Economies | Comparative Advantage

Comparative Advantage Emerging Economies  With respect to comparative advantage it could be said it is a state under which one particular economy has the efficiency of producing a product in lower product cost and of high quality than any other economy. Hence, in a case if Celsa Steel organisation undergoes outsourcing of production of certain units of their products in China as they have got lower labour cost Comparative Advantage Emerging Economies | Comparative Advantageand effective technology for producing higher quality product. Then under that circumstance it may happen that Celsa Steel organisation demand of products gets increased in the market of UK (, 2009). It is because other organisation carrying out manufacturing of products using steel products would like to make use of higher quality steel products imported from China for enhancing their production activity.

Advantages and disadvantages of free trade

Free trade is considered to be an aspect where government of UK is not going to lay down any sort of artificial barrier for smooth trade operations between UK any other country (, 2010). These artificial barriers are seen to be increased tariff and subside imposed on the trading countries.

Advantages of free trade

  • The effective utilization of free trade is going to increase gain in the foreign exchange.
  • It has also got the potential for decreasing the unemployment within UK.
  • Free trade within the economy is going to enhance the performance of the country.
  • It is also going to help out Celsa Steel organisation in increasing their overall production activity.

Disadvantages of free trade

  • If there would be increased free trade within the economy then it is going to increase level of pollution and environmental problems.
  • Free trade has the power of enhancing the instability within the UK economy (Becker, 2013).
  • Further, if government is going to remove trade barrier then it is going to lay down impact over the structural unemployment.

Impact of emerging economies on the developed economies

In the future period entering economies is going to lay down a huge impact over the functioning of developed economies. The world market indicates that China has been one of the economies which have already started laying down impact over the developed economies such as US. It is because in June 2013 Central American government has signed a $40 billion concession with that of Chinese infrastructure vehicle (Shapiro and Varian, 2013). It has also been identified that China increasing economic and political clout has already laying down affect in reshaping the world trade. Research even showed that from past half decade Chinese consumption has driven the commodity markets with respect to products such as Mozambique’s coal, iron and gas. Economy is also seen to be importing copper from Democratic Republic of Congo, Zambia and Chile. These activities undertaken by China are going to lay down great impact over the growth of developed economies (Hall and Lieberman, 2012). It may also happen that such an enhanced operation of China in the world market lay down affect over the Celsa Steel organisation carrying out export of various steel products to different parts of the world.

Impact of recent domestic and global economic shocks to the economy

The global impact was seen to be effective for the growth of UK economy. Research showed that recent domestic and global economic shocks have increased the overall demand of their products at the international market with reduction in the risk (Dang, 2013).  The statistics drawn out during the period of 2007-2013 showed that gross domestic product of UK has largely been shaped by their development in global markets. The global shock has also reduced the overall recession from the country by 6%.  Further, reduced growth in the economy and enhanced price of product within the UK market has slowdown the growth of economy.

Comparative Advantage Emerging Economies | Comparative Advantage


It has been found that for every business it is crucial for considering the economic changes within their functioning as it has got direct impact over their operations. There are various factors such as GDP that has the potential of affecting the revenues and profits of the enterprise. Thus, it is essential for Celsa Steel organisation to look after all these aspects while undertaking their activities in domestic and international market for being sustainable within the market.


Barnett, A., Mumtaz, H. and Theodoridis, K., 2012. Forecasting UK GDP growth, inflation and interest rates under structural change: a comparison of models with time-varying parameters.

Becker, U., 2013. The BRICs and emerging economies in comparative perspective: Political economy, liberalisation and institutional change. Routledge.

Burda, M. and Wyplosz, C., 2012. Macroeconomics: a European text. Oxford university press.

Burgess, S., 2011. Measuring financial sector output and its contribution to UK GDP. Bank of England Quarterly Bulletin.

Celsa Steel organisation. 2015. [Pdf]. Accessed from:< > [Accessed on: 27th May 2016]

Claessens,, 2010. Rebalancing the global economy: A primer for policymaking. CEPR.

Dang, V.A., 2013. Testing capital structure theories using error correction models: evidence from the UK, France and Germany. Applied Economics,45(2), pp.171-190.

Goodwin, N., Nelson, J., Harris, J., Torras, M. and Roach, B., 2013.Macroeconomics in context. ME Sharpe.

Hall, R. and Lieberman, M., 2012. Microeconomics: Principles and applications. Cengage Learning.

Johnston, A., 2011. The Economic Performance of UK Cities, 1995–2005: Driven by Knowledge-based Sectors or Consumption-based Sectors?. European Planning Studies. 19(12). pp.2095-2108.Order Now

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