Comparative advantage is defined as the ability of one economic agent (an individual, a household, a firm, or a government agency) to produce a particular good or service at a lower opportunity cost than other economic agents can. For example: in the textiles industry, many countries in Asia have the comparative advantage to manufacture textiles over the U.S.. This does not mean that the U.S. does not have the capabilities to produce textiles, but in the global economy, Asian countries like China have the comparative advantage. On the other side of this coin, American companies may have the comparative advantage to lend money to companies in rapidly growing economies like China's.
