Comparative advantage with nontraded goods?

Question

Q: Japanese labour productivity is roughly the same as that of the U.S. in the manufacturing sector (higher in some industries, lower in others), while the US is still considerably more productive in the service sector. But most services are nontraded. Some analysts have argued that this poses a problem for the U.S., because our comparative advantage lies in things we cannot sell on the world markets. What is wrong with this argument?

Answer 1

Manufacturing goods that can be used to trade, has always been acknowledged as the backbone of a financially healthy country.However,to manufacture goods in a competitive market,the raw materials must be readily and cheaply available.This has become non-viable to many .countries in the West, mainly because of the high cost of wages. In Asia wages are low and labour is readily available. They have taken over the manufacturing mantle from the west. We have now become like a bank with paper money and no gold bars to exchange for the paper.We can only sell our services to people who want them, invariably they don`t. We need to invest in ourselves before our paper money flies away and we are left with nothing