Absolute advantage is an economic principle that refers to the ability of an individual, company, region, or country to produce a greater quantity of a good or service with the same quantity of inputs per unit of time, or to produce the same quantity of a good or service per unit of time using a lesser quantity of inputs, than its competitors. It is the ability of an actor to produce more of a good or service than a competitor. The Scottish economist Adam Smith first described the principle of absolute advantage in the context of international trade in 1776, using labor as the only input.

Absolute advantage can be accomplished by creating the good or service at a lower absolute cost per unit using a smaller number of inputs, or by a more efficient process. For example, Saudi Arabia has an absolute advantage in oil production due to its abundant oil reserves.

It is important to note that having an absolute advantage in one area does not necessarily mean that an entity has an absolute advantage in everything. Additionally, absolute advantage is different from comparative advantage, which introduces opportunity cost as a factor for analysis in choosing between different options for production diversification.