... during this period the percentage that services account for has approximately doubled for developing countries from 9% to 17%. c). One way in which economies are allowed to prosper due to globalisation is through comparative advantage. The law of comparative advantage states that a country has comparative advantage over another in the production of a good if it can produce it at a lower opportunity cost. Globalisation means that restrictions on international trade generate gains by the reallocation of resources towards those sectors in which countries have a comparative advantage. If two countries specialise in goods, which they have comparative advantage, then both countries will benefit from trade. This is because if each country continues producing the good that it makes relatively cheaply, the countries together make more of both goods. Trade liberalisation increases the size of the market, so that the market is now on a global scale. This leads to ...

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