I need your imput on a question?
Name some reasons why you think that mexico has not developed a comparative advantage and why switzerland with no resources has--(banking)?
Thanks
2007-02-28 09:40:25 · 3 answers · asked by jbird3351 2 in Social Science ➔ Economics
Mexico does have a competitive advantage, whihc is its cheap labor supply and proximity to the US. If you look at Mexico's GDP, you will find that a very large portion of it comes from two sources: (A) mexican americans send capital (money) back to the US to their families (B) oil.
So there you go, mexico has one labor capital advantage over other countries: ie it has a large supply of cheap labor that comes to the US to work, and transfers money made in the US back into the Mexican economy (B) a natural resource in the form of oil, which is used by the country as well as exported.
2007-02-28 11:34:27 · answer #1 · answered by brad p 2 · 0⤊ 0⤋
Every country has a comparative advantage in relation to a single other country. However, when you combine them all, then it is a little harder to determine what that advantage is. In Mexico's case, the reason that it may not have developed a comparative advantage may be related to its government structure. Perhaps there is some sort of restriction from the government which causes individuals to not want to pursue entrepreneurial opportunities to develop technological advances or start new businesses. This could also explain why so many choose to come to the US, where such limitations are not imposed.
Switzerland may not have many resources, but it has banking as a major industry for several reasons. One, it has a comparative advantage in this industry. Part of this stems from the fact that the country has been a neutral country. It tends to stay out of wars, and thus has good relations with most countries. This causes other countries to trust them and thus they will put their money there. A stable government with regulations protecting depositors also leads to part of its advantage.
2007-03-01 10:30:48 · answer #2 · answered by theeconomicsguy 5 · 1⤊ 0⤋
Mexico does not have some of the basic prerequisites of a wealth-producing free enterprise economy. Its government is notoriously corrupt, despite a series of elections in which campaigns promised to clean it up. They need better protection of private property and small entrepreneurship. Mexico is not nearly as safe and attractive a place to do business at the US or Switzerland.
2007-03-01 23:10:55 · answer #3 · answered by sargon 3 · 1⤊ 0⤋