Comparative advantage encourages countries to specialize in what?

Comparative advantage encourages countries to specialize in the goods and services at which they are relatively most efficient. This economic principle suggests that countries should focus on producing items that they can create at a lower opportunity cost compared to other countries. By doing so, they can trade with others to obtain goods that they produce less efficiently, leading to an overall increase in economic efficiency and wealth generation.

This specialization allows countries to maximize their production capabilities and resources, ultimately leading to more efficient use of labor, capital, and technology. Consequently, when countries engage in trade based on their respective comparative advantages, they can enjoy a greater quantity and variety of goods than if they attempted to produce everything independently. This principle is foundational in international trade theory, illustrating how and why nations can gain from trade despite having differing levels of productivity in various industries.