Description
Reply to Question (IComparative Advantage Around the World)
Based on the attached discussion, I received this question.
Q –
Given Qatar’s reliance on natural gas for economic revenue and the associated environmental challenges, how can the government balance the need for continued growth in the natural gas sector with the necessity of reducing CO2 emissions and addressing climate change?
1
Comparative Advantage
Name
Institution
Course
Instructor
Date
2
Comparative Advantage
The Ricardo comparative advantage principle of 1817 shows the importance of nations
concentrating on manufacturing commodities where they can produce relatively lower production
costs. It emphasizes cost and that countries should export only products with relatively lower
manufacturing costs (Liu et al., 2023). Therefore, efficiency and quality of production are
enhanced with this, as countries focus their attention on the production of commodities they
specialize in, which has reduced the cost of labor.
Besides, the countries utilize the total capacity of available resources to enhance the
output’s quality. Ever since the inception of this comparative advantage theory, it has been
adjudged as central to the success of regional and international trade (Carbaugh, 2015). This paper
highlights Qatar’s comparative advantage, sources of its comparative advantage, issues of
problems encountered, the role of government, and policies that could be undertaken to enhance
Qatar’s comparative advantage.
For a long time, Qatar has been ranked as the greatest producer of natural gas globally. It
can produce natural gas at a relatively low opportunity cost because it uses cost-friendly liquefied
natural gas (LNG) and gas-to-liquid technologies (Abulibdeh, 2022). The availability of effective
technologies in Qatar greatly helped it win over its natural gas production industry competitors.
Qatar also uses environmentally friendly technologies aiming at reducing the emission of carbon
products into the environment. One of the technologies used is carbon capture and storage (CCS),
which helped decrease carbon discharges in the atmosphere, improving people’s health and
reducing climatic changes (Oxford Business Group, 2024). Natural gas production in Qatar
contributes to the country’s revenue.
3
Another major source of Qatar’s competitive advantage in natural gas production is the
availability of large natural gas reserves. Qatar is ranked third among the countries with large
natural gas reserves (LNG) (Abulibde, 2022). In 2022, the natural gas reserves in Qatar measured
843 trillion cubic feet, the third from Russia and Iran. Most of these reserves are in South Pars,
located on the Iranian shore of the Arabian Gulf (International, 2024).
Among the challenges Qatar faces in producing natural gas is the emission of high levels of
carbon dioxide (CO2). CO2 emission is detrimental to the environment and has adversely affected
Qatar’s climate, characterized by extreme heat and coastal floods. Various sectors of Qatar’s
economy, such as public health and food security, have also been negatively affected, leading to
lowered economic growth (International Trade Administration, 2024). Given the increased
negative effects of CO2 emissions, Qatar should implement strategies to reduce CO2 in the
atmosphere. Another problem in Qatar in producing natural gas is the lack of economic
diversification. The hydrocarbon sector has greatly contributed to Qatar’s revenue for a long time.
Statistically, since 2014, 70% of Qatar’s income is based on the oil and gas sector. This puts Qatar’s
economy at risk and reduces the economic growth rate.
The role of the Qatar government is to ensure Qatar’s continuity of comparative advantage
in the natural gas industry. The governmental role in this case is supported by the public goods
theory that portrays the importance of governmental impact, especially in markets with public
definitions. Qatar’s government supports the natural gas industry in many ways. One of the ways
includes enacting policies that support the production of clean gas (Abulibdeh, 2022).In this
pursuit, the Qatar government has engaged in several international agreements, including the
United Nations Framework Convention and the Paris Agreement. All of them major in ensuring
4
environmental stability. Also, the government aims to promote using renewable energy, such as
compressed natural gas, in the public transport system.
To enhance competitive advantage in Qatar, the government should develop policies that
mitigate the problems of climate change. Production of renewable energy and clean gas should be
prioritized. This way, issues in Qatar, such as water scarcity, will be reduced, improving consumer
satisfaction (Abulibdeh, 2022). Moreover, the government should support the local manufacturers
by providing resources and initiating policies that reduce external competition. Finally, the Qatar
government should invest in technologies that promote clean gas production. These strategies will
significantly help Qatar achieve its goals of National Vision 2030.
5
References
Abulibdeh, A. (2022). Time series analysis of environmental quality in the state of Qatar. Energy
Policy, 168, 113089.
Carbaugh, R.J. (2019). International Economics
International
Trade
Administration.
(2024).
Economic
Overreliance
on
the
Hydrocarbon
Sector.
International.
(2024).
U.S.
Energy
Information
Administration
(EIA).
Liu, H., Lin, L., Cheng, Y., Chen, X., & Ren, J. (2023). Competitive advantage, relationship, and benefit:
Primary and secondary influencing factors of supply chain collaboration in China’s advanced
manufacturing industry. Plos one, 18(6), e0285247. Doi: 10.1371/journal.pone.0285247
Oxford Business Group. (2024). Qatar moves to bolster gas production and sustainable energy.
Comparative Advantage
Name
Institution
Course
Instructor
Date
2
Comparative Advantage
The Ricardo comparative advantage principle of 1817 shows the importance of nations
concentrating on manufacturing commodities where they can produce relatively lower production
costs. It emphasizes cost and that countries should export only products with relatively lower
manufacturing costs (Liu et al., 2023). Therefore, efficiency and quality of production are
enhanced with this, as countries focus their attention on the production of commodities they
specialize in, which has reduced the cost of labor.
Besides, the countries utilize the total capacity of available resources to enhance the
output’s quality. Ever since the inception of this comparative advantage theory, it has been
adjudged as central to the success of regional and international trade (Carbaugh, 2015). This paper
highlights Qatar’s comparative advantage, sources of its comparative advantage, issues of
problems encountered, the role of government, and policies that could be undertaken to enhance
Qatar’s comparative advantage.
For a long time, Qatar has been ranked as the greatest producer of natural gas globally. It
can produce natural gas at a relatively low opportunity cost because it uses cost-friendly liquefied
natural gas (LNG) and gas-to-liquid technologies (Abulibdeh, 2022). The availability of effective
technologies in Qatar greatly helped it win over its natural gas production industry competitors.
Qatar also uses environmentally friendly technologies aiming at reducing the emission of carbon
products into the environment. One of the technologies used is carbon capture and storage (CCS),
which helped decrease carbon discharges in the atmosphere, improving people’s health and
reducing climatic changes (Oxford Business Group, 2024). Natural gas production in Qatar
contributes to the country’s revenue.
3
Another major source of Qatar’s competitive advantage in natural gas production is the
availability of large natural gas reserves. Qatar is ranked third among the countries with large
natural gas reserves (LNG) (Abulibde, 2022). In 2022, the natural gas reserves in Qatar measured
843 trillion cubic feet, the third from Russia and Iran. Most of these reserves are in South Pars,
located on the Iranian shore of the Arabian Gulf (International, 2024).
Among the challenges Qatar faces in producing natural gas is the emission of high levels of
carbon dioxide (CO2). CO2 emission is detrimental to the environment and has adversely affected
Qatar’s climate, characterized by extreme heat and coastal floods. Various sectors of Qatar’s
economy, such as public health and food security, have also been negatively affected, leading to
lowered economic growth (International Trade Administration, 2024). Given the increased
negative effects of CO2 emissions, Qatar should implement strategies to reduce CO2 in the
atmosphere. Another problem in Qatar in producing natural gas is the lack of economic
diversification. The hydrocarbon sector has greatly contributed to Qatar’s revenue for a long time.
Statistically, since 2014, 70% of Qatar’s income is based on the oil and gas sector. This puts Qatar’s
economy at risk and reduces the economic growth rate.
The role of the Qatar government is to ensure Qatar’s continuity of comparative advantage
in the natural gas industry. The governmental role in this case is supported by the public goods
theory that portrays the importance of governmental impact, especially in markets with public
definitions. Qatar’s government supports the natural gas industry in many ways. One of the ways
includes enacting policies that support the production of clean gas (Abulibdeh, 2022).In this
pursuit, the Qatar government has engaged in several international agreements, including the
United Nations Framework Convention and the Paris Agreement. All of them major in ensuring
4
environmental stability. Also, the government aims to promote using renewable energy, such as
compressed natural gas, in the public transport system.
To enhance competitive advantage in Qatar, the government should develop policies that
mitigate the problems of climate change. Production of renewable energy and clean gas should be
prioritized. This way, issues in Qatar, such as water scarcity, will be reduced, improving consumer
satisfaction (Abulibdeh, 2022). Moreover, the government should support the local manufacturers
by providing resources and initiating policies that reduce external competition. Finally, the Qatar
government should invest in technologies that promote clean gas production. These strategies will
significantly help Qatar achieve its goals of National Vision 2030.
5
References
Abulibdeh, A. (2022). Time series analysis of environmental quality in the state of Qatar. Energy
Policy, 168, 113089.
Carbaugh, R.J. (2019). International Economics
International
Trade
Administration.
(2024).
Economic
Overreliance
on
the
Hydrocarbon
Sector.
International.
(2024).
U.S.
Energy
Information
Administration
(EIA).
Liu, H., Lin, L., Cheng, Y., Chen, X., & Ren, J. (2023). Competitive advantage, relationship, and benefit:
Primary and secondary influencing factors of supply chain collaboration in China’s advanced
manufacturing industry. Plos one, 18(6), e0285247. Doi: 10.1371/journal.pone.0285247
Oxford Business Group. (2024). Qatar moves to bolster gas production and sustainable energy.
6
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