Comparative Advantage in International Trade

According to the article of US auto in Carbaugh text, it shows the healthcare benefits really negatively affect comparative advantage. In this case, the big three companies in US was competed by Japanese companies. It all because that the big three cost much money to treat their active employees and retirees. Even the US government supply them solve this problem, GM Company still bankrupt. Relatively, Japanese automakers cost healthcare less than. In my opinion, in comparative advantage, Japanese automakers should produce more cars in the world, and US automakers can focus on different product.

And I want to talk about my country, Taiwan, which provides healthcare by nation. Taiwan is famous about producing semiconductor. Compare other counties which produce semiconductor, Taiwan has comparative advantage of it. It is that unit product price is lower than other counties; due to Taiwan provides national health insurance, companies can pay healthcare not so much.

Moreover, I want to talk about an agreement between Taiwan and China called ECFA (Economic Cooperation Framework Agreement) in June 29, 2010. This agreement protects Taiwan and China can trade more free and make Taiwan export to China more. But it makes that Taiwan decrease export to other countries, for example Japan, Euro and US. Meanwhile, Taiwan has significant comparative advantages of Electrical and Electronic anti see the retreat of global exports, even industry comparative advantage reversal phenomenon. Taiwan excessively focus on the China that makes some future problem.