00:01
So we're going to be looking here at the international trade as a broad topic, specifically looking at comparative advantage.
00:11
So international trade.
00:19
All right.
00:20
So i suppose that germany decides to become self -sufficient in bananas and even to export them.
00:27
In order to accomplish this, large tax incentives are granted to companies that will invest in banana production soon.
00:35
The germany industry is competitive and able to sell bananas at the lowest price anyway.
00:40
Does germany have a comparative advantage? we need to do an analysis of this and what will be the consequences for the overall economy.
00:51
So first of all, we're going to outline that comparative advantage is basically when a country is able to produce at the least opportunity cost.
01:02
At the least opportunity cost.
01:07
Now, the question is, is german really producing at the least opportunity cost? and the answer is no, absolutely not.
01:17
There is no indications to this for the simple reason that it may seem as if the production of bananas is at the least opportunity cost.
01:32
But the truth of the matter is the heavy tax incentives, what it literally does, what it literally does, this incentive.
01:46
It reduces the, it actually is a diversion of funds, a diversion of funds that could have been used in other productive sectors.
02:00
So it's been channeled through...