What is The law of comparative advantage
The law of comparative advantage, though, suggests that it would be unwise of UK economy to try to replicate German model. First German firms have already established a leading position in producing high-quality consumer and capital goods and the comparative and absolute advantage is already in its favour. Second, firms in BRIC economies are trying to compete with Germany and other engineering and manufacturing producers. UK firms could attempt to compete however they may struggle since they are unable to employ workers on significantly lower wages. Third the UK should lay emphasis on the industries where it already has comparative advantage namely high-quality design, niche top-end manufacturing and engineering and most prominently services. The southeast of England is home to a number of the world's leading insurance, marketing, financial and legal and consultancy firms. These industries are very difficult to replicate since they are based on the value of the human capital they employ and not physical capital. The UK has already established these industries and must be careful not to lose them. Free-market economists would argue that government would be wiser to listen to advice of David Ricardo and focus on what the nation already does best instead of trying to copy another nation in a superior position