Comparative Advantage

As the capitalist world economy unfolded, different regions increasingly came to specialize in the production of different types of goods and services. In Europe during (and often before) the Industrial Revolution, for example, Britain became a major producer of textiles, ships, and iron; France produced silks and wine; Spain, Portugal, and Greece generated citrus, wine, and olive oil; Germany, by the end of the 19th century, was a major exporter of steel, ships, and chemicals; Czechs were selling glass and linens; Scandinavia sold furs and timber; and Iceland exported cod to the growing middle classes. Within the United States, similarly, different places acquired advantages in some goods and not in others: The northeast was dominated by light industry, particularly textiles; the Manufacturing Belt became the ...

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