Comparative and Competitive Advantage

Abstract

This paper reviews the relevance of the concepts of comparative and competitive advantage for the developing countries of the Asian‐Pacific region. It argues that the competitive advantage supporters' attack on the comparative advantage concept rests partly on a misunderstanding of comparative advantage and partly on a false analogy–that between the determinants of the success of a single firm and the success of a nation. The central theme is that for a developing country, as for any other, while competitive advantage may be relevant for the performance of firms, comparative advantage remains as relevant as ever for the performance of the nation.