The lesson
Use the concept, then apply it to a real decision. Use this page as a fast, high-quality revision pass—not a wall of notes to memorise.
Comparative advantage
A country has comparative advantage in a product when it has the lower opportunity cost of producing it. It can gain from trade even if another country is more productive in every good.
- Specialisation can raise total output and consumption possibilities.
- Terms of trade determine how the gains are shared.
- Real-world adjustment costs, transport, trade barriers and uneven bargaining power qualify the simple model.
Causes and effects of globalisation
Globalisation has been accelerated by lower communication and transport costs, trade liberalisation, foreign direct investment and multinational firms.
- Potential benefits include technology transfer, larger markets and lower prices.
- Potential costs include job displacement, environmental damage and profits leaving the host country.
- Evaluation should consider regulation, local supply chains, labour standards and the time period.
Worked exam thinking
Worked example: both countries can gain
Prompt: How can two countries gain from trade if one country is more productive in both goods?
How to turn knowledge into marks
Use this answer route
For a focused explanation or short evaluation question on this topic:
- 1State the concept or relationship.
- 2Use the diagram, data or example accurately.
- 3Apply the impact to stakeholders.
- 4Evaluate the conditions and trade-offs.
Quick questions
Check your understanding
What is comparative advantage?
Producing a good at a lower opportunity cost than another producer.
Is globalisation always beneficial?
No. Benefits and costs are uneven, and outcomes depend on regulation, institutions and adjustment support.
What is the difference between free trade and globalisation?
Free trade focuses on fewer barriers to trade. Globalisation is broader: it includes cross-border flows of goods, capital, ideas, technology and people.