When comparative advantage stories fail in the factory

Comparative advantage remains a crisp classroom idea. On the shop floor, unit labor costs bump into minimum efficient scale, supplier ecosystems, and capital constraints that make “move production to the lowest relative cost” sound naive. Diagnostics should name the mechanism—not just the country label.

We teach participants to pair simple relative productivity sketches with a second layer: where increasing returns make small countries’ niches fragile, and where logistics costs dominate nominal wage gaps. The point is intellectual honesty. A chart can guide questions; it cannot replace supplier audits.

If you only take one habit from Comparative Advantage Diagnostics, make it this: write down the data you lack before you argue from a chart. That single practice prevents overconfident slide decks in front of leadership.