I’m not sure if Swiss fine machinery is the best example here. What is it about the nature of Switzerland that makes it a more natural place to create fine machinery then anywhere else?
Similarly, using American corn as an example of how free trade should work is pretty underhanded. There’s a ridiculous amount of subsidies there, and the US doesn’t have any qualms with dumping the resulting product on international markets.
The climate and soils in Iowa make it a great place to grow corn - even without subsidies farmers would grow corn in Iowa. Despite a much lower cost of labor in other countries Iowa can still compete well in the world markets because corn grows so much better.
There is probably no advantage to making machines in Switzerland that you couldn't duplicate in Iowa, but because Iowa has the natural advantage in corn it is better for everybody if Iowa concentrates on growing the best corn (hopefully this includes improving their soils to grow even better corn), while the people of Switzerland concentrate on making better machines. Then they trade machines for corn and everybody is better off. If instead everybody was a jack of all trades there would be less corn because the people of Iowa aren't as focused, and the machines the Swiss produce wouldn't be as good because they don't get as much practice making them.
Of course the above is simplistic. Iowa has machinists that make fine machines, and there are Swiss farmers who grow some fine corn.
In reality though, Iowa has more than enough corn farmers for the population, and plenty of low-wage manufacturing workers to create said farm machinery there. Especially when the Swiss Franc/USD are 1:1, the Swiss would just open a plant there and finance it
At least in the theoretical example it depends on whether its more economical to build the machines closer to the farms in exchange for sacrificing farmland to do so.
Even if the world isn't so cut and dry to turn all of Iowa into one giant corn farm if Iowa is the best place to grow corn than corn production should naturally trend there, pushing internal business out that can operate elsewhere while subsuming corn production elsewhere where its less profitable.
That kind of effect is very minute on the actual day to day operating economy and decision making process of business entities involved which is why we don't just see all of Iowa turned into a corn farm, but those kind of effects have positive efficiency influence over long time frames.
Economies without large amounts of bulk natural resources are good targets for specializing in value-add industry.
It is both positive- and negative- feedback. There are lots of things Switzerland doesn't have which makes it specialize in the things it does – that concentration of specialization is it's own efficiency generator.
I had to look up that term [1], thanks for introducing me to it.
I'm still not sure how Switzerland the geographic place intrinsically leads to more efficient watch-making, as Shenzen and other Chinese factory cities make copious use of établissage in many different industries. Also, Apple's offshored Chinese manufacturing demonstrates that extremely high quality hardware manufacturing is not ethno-culturally-bound, and can be successfully transmitted through a corporate culture.
Ricardo's comparative economic advantage in Net age-birthed industries seems increasingly more hand-wavium the further away I get from intrinsically geographically-tied economic inputs like mineral resources, fresh water, salt water fish migration paths, or latitude-dependent agriculture, etc., and the further one transits away from historical network effects like Swiss watch-making, Silicon Valley software-writing, or Belgian diamond-polishing, etc.
The mathematical and empirical analyses of comparative advantage [2] [3], as well as great explanations about it [4], don't seem to address extremely complex goods with very high cognitive input factors, like semiconductors, industrial machinery, bio-pharma products, avionics, spacecraft, high-end electronics manufacturing, fracking, cloud services, search engines, e-commerce, etc., and I suspect comparative advantage breaks down as we evolve those and similar economic areas because ceteris paribus, there is no natural, lasting advantage one nation comparatively holds over another on human cognitive power (which I celebrate). In all those areas, there are leaders, but not so much and to such a comparative degree that they decisively elbow out other nations from economically attempting to enter those industries now or in the future.
The Sudan might be a cognitive desert right now compared to Palo Alto or Shenzen, but there is nothing structurally preventing them from turning into a powerhouse in the future (on a multi-generational timescale) to contend with, as say there is with them turning into the next corn-production hub like Iowa, or oil-producer like Saudi Arabia or the fracking Permian Basin.
in this specific case, it's not about the location of Suisse per se, but more about the people living there - focus on absolute quality, not cost-cutting, not price/value ratio but quality first. Of course this is very simplified, and may be less true for some cases these days.
The other point - most countries subsidy agriculture in some way. If US shouldn't dump their corn on global market, so shouldn't european farmers/milk producers (especially French I think).
Similarly, using American corn as an example of how free trade should work is pretty underhanded. There’s a ridiculous amount of subsidies there, and the US doesn’t have any qualms with dumping the resulting product on international markets.