Provide peer review/respobse the discussion below... point out strengths & opportunity for improvement

 

Some MNCs establish a manufacturing facility where there is a relatively low cost of labor. Yet, they sometimes close the facility later because the cost advantage dissipates. Why do you think the relative cost advantage of these countries is reduced over time? (Ignore possible exchange rate effects)

The theory of comparative advantage helps to explain why protectionism is typically unsuccessful. Adherents to this analytical approach believe that countries engaged in international trade will have already worked toward finding partners with comparative advantages. If a country removes itself from an international trade agreement, if a government imposes tariffs, it may produce a local benefit in the form of new jobs and industry. (Investopedia) In international trade, the law of comparative advantage is often used to justify globalization, since countries can have higher material outcomes by producing only goods where they have comparative advantage and trading those goods with other countries. Offshoring manufacturing to countries with less stringent labor laws. (Investopedia)

Hayes, A. (n.d.-b). What is comparative advantage?. Investopedia. https://www.investopedia.com/terms/c/comparativeadvantage.asp#toc-comparative-advantage-vs-competitive-advantage