Why can globalization be good?

Why can globalization be good? Comparative
advantage
• Suppose US can produce 100 units of soybeans, 100 units of garments (or some combination thereof)
• Bangladesh can produce 20 units of soybeans or 80 units of clothing (or some combination thereof)
Comparative advantage: soybean production
• For US, opportunity cost of 1 unit of soybean production is 1 unit of garments
• For Bangladesh, opportunity cost of 1 unit of soybean production is 4 unit of garments
Comparative advantages: garment production
• For US, opportunity cost of 1 unit of garments if 1 unit of soybeans
• For Bangladesh, opportunity cost of 1 unit of garments production is 1/4 unit of soybeans
US has comparative advantage in soybeans, Bangladesh has comparative advantage in garments

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