absolute advantage



  • noun a situation in which a country, or sometimes a person or company, is more efficient at producing something than its competitors (i.e. its output per input unit is higher). This gives an advantage to established firms which can keep costs low in comparison to new entrants.

Health Economics

  • (written as Absolute Advantage)
    This exists when a firm or a jurisdiction can produce a given quantum of a good or service with fewer inputs than another. Call centres are increasingly located in India not because their location there involves fewer inputs for any given number of calls (absolute advantage) but because the lost output from using people in this way rather than in another is smaller than it would be in, say, most European countries or North America. Some countries have an absolute advantage in producing nearly everything but it is impossible for them to have a comparative advantage in everything. In matters of efficient resource allocation, absolute advantage is irrelevant and comparative advantage is everything.


  • noun an advantage enjoyed by an area of the world which can produce a product more cheaply than other areas