Global Trade, Comparative Advantage and International Physical Distribution

Posted on Oct 22, 2026 in International Business

In this course, I will learn about air, water, land, and multimodal transportation, as well as different cargo types. I will analyze the importance of international transportation and how to choose the most efficient option. I will also study sustainability, circular economy, ecodesign in packaging, and packing and labelling as marketing tools.

PACKAGING, PACKING AND LABELING

TRANSPORT IN THE INTERNATIONAL PHYSICAL DISTRIBUTION

LEARNING ACHIEVEMENT

The student understands international trade, globalization, and competitive advantages, and explains how companies create value and improve their competitiveness in the global market.

FROM GLOBALIZATION TO INTERNATIONAL PHYSICAL DISTRIBUTION

WHAT IS GLOBALIZATION?

  • Globalization is the interdependence and connection of countries around the world in different aspects, such as economic, commercial, technological, cultural, and social.
  • Countries specialize in producing goods in which they have a comparative advantage.

WHAT IS COMPARATIVE ADVANTAGE?

Comparative advantage is when a country can produce goods at a lower opportunity cost than another country, allowing it to specialize and benefit from trade.

ABSOLUTE ADVANTAGE

Peru and the USA produce textiles and machinery. The USA has an absolute advantage in both because it uses fewer hours per unit, making its production more efficient. However, each country should specialize in what it produces at a lower opportunity cost.

COMPARATIVE ADVANTAGE

  • Peru: Produces textiles in 2 hours and machinery in 8 hours. Its opportunity cost for textiles is 0.25 machinery, so it specializes in textiles.
  • USA: Produces textiles in 1 hour and machinery in 2 hours. Its opportunity cost for textiles is 0.50 machinery, so it specializes in machinery.

Result: Both countries benefit from specialization and trade, gaining access to more textiles and machinery than they could produce on their own.

DIFFERENCES

  • ABSOLUTE ADVANTAGE: A country can produce a product using fewer resources than another country.
  • COMPARATIVE ADVANTAGE: A country can produce a product at a lower opportunity cost than another country.
  • RELATIVE ADVANTAGE: A country has a favorable position compared to another country in a particular activity or characteristic.

FACTORS RELATED TO COMPARATIVE ADVANTAGE

  • Natural resources: Soil and biodiversity.
  • Climate and geographic conditions.
  • Availability of raw materials.
  • Knowledge and productive capacities.
  • Production costs.
  • Skilled labor.

WHAT DO COMPARATIVE ADVANTAGES ALLOW?

  • Specialization.
  • Trade.
  • Greater efficiency.
  • More availability of goods.
  • Potentially lower costs.

PERU’S COMPARATIVE ADVANTAGES

Peru has comparative advantages in agroexports, especially in products such as blueberries, avocados, and grapes.

1. IS SPECIALIZATION AND PRODUCTION ENOUGH TO COMPETE ABROAD AND GENERATE VALUE?

No, specialization and production are not enough. Companies must also focus on quality, innovation, efficiency, and customer needs to generate value and compete internationally.