Considerably more productive in the service sector

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Japanese labor productivity is roughly the same as that of the United States in the manufacturing sector (higher in some industries, lower in others), while the United States is still considerably more productive in the service sector. But most services are nontraded. Some analysts have argued that this poses a problem for the United States, because our comparative advantage lies in things that we cannot sell on world markets. Explain what might be wrong with this argument. How does the fact that many goods are nontraded affect the extent of possible gains from trade? Use this week’s lecture and assigned reading to inform your post. Respond to at least two of your classmates’ posts.

Reference no: EM131103578

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