Comparative Advantage Benefits for Caribbean Countries
The Theory of Comparative advantage is based on the principle of absolute advantage which states that an entity which can produce a good or service at a per unit cost lower than its competitors, has absolute advantage. This means that this entity can produce a good with the lowest amount of inputs which results in low cost and high profits. Comparative advantage can be describe as one country or entity being able to produce a good or service t a lower opportunity cost than a competitor. That theory also extends on the theory of absolute advantage by stating that a country or entity still benefits from trade even though it may have an absolute advantage over goods or services. Based on the principle of comparative advantage Caribbean countries can each produce goods and services in which they are efficient in doing which will result in maximum profits. This would make the idea of a Caribbean trading block a very viable idea since we will all be working as one market and can exploit our capabilities be each producing what we are efficient in.
The CARICOM Single Market and Economy (CSME) is one such declaration which encourages integration among CARICOM nations to produce goods by exploiting their factors of production through which they have a competitive edge. This can result in a greater variety and quality of goods and services which can be traded internationally and among each other, thereby increasing the standard of living for CARICOM members. Barriers to intra-regional trade will be eliminated and a common external tariff will be established for imports from another country that is not a member. There is also free movement of factors of production among the member countries. Businesses owned by a member country can be freely established in another member state. An agreement among members relating to international and internal trade and a coordinated trade policy must be established.
The establishment of the CSME would be a great