The US is (still) the third largest cotton producer in the world.
https://en.wikipedia.org/wiki/Cotton_production_in_the_Unite... https://www.npr.org/2013/12/02/248243399/technology-subsidie...
Not to mention the chicken and egg problems - are they dysfunctional because of monoindustry or monoindustry because they are dysfunctional? Dysfunction leads to monoindustry since the base cannot be lost to war - see conflict minerals. Everyone wisely stays away and refuses to trade with smash and grab warlords and despots out of self preservation alone - owners wisely do not want to legitimise that sort of capital seizing for the same reason one doesn't try to work for a non survival desperation cannibal. They did it before and will probably do it again to you when convenient.
Causation and correlation with such messy subjects that I can see your point even if I disagree with the cause.
[1] https://en.wikipedia.org/wiki/Comparative_advantage#Criticis...
On the other hand having a closed border and expecting to do everything yourself leaves you exposed to potential famines and in a general state of poverty, see North Korea for an example.
Oh? Which countries have been successful as you describe?
>Just look at the U.S. as an example - if they followed Smith's advice, they would still continue to trade cotton. This advice will never let countries to build up an industrial base. (Or funny you mentioned LG - they were originally a textile corporation but the government forced them into electric industry.)
Wrong. Smith's advice isn't arguing for static stagnant maintenance of the status quo. Economies, markets and products are always evolving. There's always opportunities to grow and change. That doesn't mean there's always an opportunity at every moment to outcompete a dominant foreign manufacturer.
>In my view, a country should have as many diverse industries as much it can
Countries do this already. If it's a capitalist economy and there's opportunity people will give it a go. I think you're grossly oversimplifying this and don't really understand how huge the market is and the number of industries there are.
I think you'll find it's much harder to manage your fantasy in reality than you imagine.
>It's great if you e.g. produce agricultural machinery and you can talk directly to the farmer, who is going to use it. If you sell this machinery to people on the other side of the planet, with a cultural barrier, this gets much trickier.
And yet people do sell all sorts of things on the other side of the planet, all the time, because while it may be "trickier" it means they have a much larger market, and greater opportunities for revenue and growth.
Frankly if your vision was at all workable it would have been settled upon by now.
And I am not against free trade (well, with reservations), but I think this idea has been proven wrong historically. I think countries that try to do a bit of everything, be self-sufficient, and perhaps specialize only in some very specific areas are generally more successful.
Just look at the U.S. as an example - if they followed Smith's advice, they would still continue to trade cotton. This advice will never let countries to build up an industrial base. (Or funny you mentioned LG - they were originally a textile corporation but the government forced them into electric industry.)
In my view, a country should have as many diverse industries as much it can keep all the specialists busy (the same is true for companies, by the way). That means to try to produce locally everything that is sufficiently consumed locally.
The reason why is that there are strong network effects in diversification. It's great if you e.g. produce agricultural machinery and you can talk directly to the farmer, who is going to use it. If you sell this machinery to people on the other side of the planet, with a cultural barrier, this gets much trickier.