Canada is extremely well endowed with forests. It is no surprise,
therefore, that it has a comparative advantage in a whole range of forestry
products.
TRSTR/The CP Images
Human Capital
Acquired skills, what economists call human capital, matter greatly in
determining comparative advantage. Beginning in the late nineteenth
century, Germany had an excellent set of trade schools that were
attended by virtually every male who did not go on to higher academic
education. As a result, Germany developed, and still maintains, a strong
comparative advantage in many consumer goods that require significant
engineering skills to produce, such as home appliances, power tools, and
small machines. The people of Persia (now Iran) produced carpets of high
quality over the centuries, and from childhood their workers developed
skills in carpet making that few others could match. So they had a
comparative advantage in high-quality carpets and some related
commodities. Early on, Americans developed the skills necessary to mass-
produce goods of reasonable quality made from standardized parts. So
the United States developed a comparative advantage in many consumer
goods made with mass-production techniques.
Acquired Comparative Advantage
The example of human capital makes it clear that many comparative
advantages are acquired. Further, they can change. Thus, comparative