Analysis

Brazil is the eleventh largest economy in the world, and American is its second largest trading partner. Due to the comparative advantage of Brazil in:

• Climate: Brazil’s mild winters and hot, humid summers create an ideal climate for coffee production, allowing for two harvests per year.
• Soil: Brazil’s coffee-growing regions have rich, fertile, and acidic soil that prevents diseases and pests, making it well-suited for coffee production.
• Labor: Brazil has a large and relatively low-cost workforce, making it easier for coffee farmers to hire workers for harvesting, processing, and other tasks. United States is leading producer of aeroplanes. The factors include
• Skilled Work Force: America has a large sector for technicians and engineers.
• Technology: The United States has many companies heavily invested in research and development. So, since the two countries have comparative advantage over each other for Coffee and Airplanes, they trade.