Production Possibilities Frontier: A challenge for countries under Free Trade Agreements

Abstract

Introduction: This article analyzes production and
trade conditions in countries in Central America (Nicaragua and El Salvador), South America (Peru, Chile,
and Colombia), and North America (Mexico), all of
which have signed free trade agreements within the
framework of globalization. It studies the impact of
opportunity costs on international transactions and
their relationship with comparative advantage. Objective: To understand the role of factors such as technology, opportunity cost, and the input-output matrix in the analysis of the production possibility frontier and trade barriers. The methodology is qualitative, explanatory in scope, and based on a comparative study of Latin American countries with trade links to major powers. The results show that these countries mainly export raw materials and import finished goods, which generates high levels of imports and low value added in exports. In addition, their production matrices are technologically limited, which reduces the exploitation of the benefits derived from international trade. Conclusion: it is necessary to improve productive and technological capacities to increase competitiveness and obtain greater advantages from existing trade agreements.