Final answer:
A country like Malawi can benefit from trade by specializing in goods for which it has a comparative advantage, meaning it has lower opportunity costs compared to other countries. Trade theories emphasize that even without absolute advantages, nations can gain through international trade by utilizing their comparative advantages.
Step-by-step explanation:
If you overheard someone claiming that poor countries like Malawi have no absolute advantages, it would be important to respond with a clarification of how international trade works and the distinction between absolute and comparative advantage. While it may appear that a country like Malawi lacks absolute advantages in terms of rich soil, capital, and high-skill labor, it does not necessarily prevent them from benefiting from trade. The theory of comparative advantage suggests that even if a country is less efficient in producing all goods, it can still benefit by specializing in the production and export of goods for which it is relatively more efficient or has a lower opportunity cost than other countries.
This theory extends beyond natural resources and geographical advantages. It includes the production of various goods and services, possibly in the agricultural sector, manufacturing, or something as simple as labor-intensive industries where Malawi may have lower labor costs. By engaging in international trade, Malawi can import goods that require high-skill labor and better capital allocation while exporting goods in which it can produce more effectively compared to its domestic opportunity costs.
In addition, countries can and do develop their resources and skills over time, potentially changing their comparative advantages. Investment in education and infrastructure, for example, can help improve the productivity of labor and create new industries. Therefore, it is incorrect to assert that no country cannot benefit from trade.