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The law of comparative advantage was first proposed by David Ricardo. The Ricardian theory of comparative advantage became a basic constituent of neoclassical trade theory. Any undergraduate course in trade theory includes a presentation of Ricardo's example of a two-commodity, two-country model.
Jul 17, 2023 · Learn the major historical figures who first described the effects of international trade: Adam Smith, David Ricardo, and Robert Torrens. Historical Overview The theory of comparative advantage is perhaps the most important concept in international trade theory.
Adam Smith was the first to articulate the possibility that international trade is not a zero-sum game and that, in fact, a single-minded reliance on exports is counterpro-ductive. He explained that different countries will use different quantities of resources in producing the same goods.
- Farrokh Langdana, Peter T. Murphy
- 2014
David Ricardo developed the classical theory of comparative advantage in 1817 to explain why countries engage in international trade even when one country's workers are more efficient at producing every single good than workers in other countries.
Learn how a rearrangement of production on the basis of comparative advantage, coupled with international trade, can lead to an improvement in the well-being of individuals in all countries. Learn the major historical figures who first described the effects of international trade: Adam Smith, David Ricardo, and Robert Torrens.
The classical theory of trade refers to the path-breaking writings of a set of economists in the late 18th century and 19th century, including Adam Smith (1723–1790), David Ricardo (1772–1823), Robert Torrens (1780–1864), John Stuart Mill (1806–1873), and others.
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The Theory of International Trade. F Classical theory. » Absolute advantage: Adam Smith (1776) » Comparative advantage: David Ricardo (1817) F Neo-Classical theory. » Increasing marginal costs of production » Factor proportions theory: Heckscher-Ohlin (1919, 1933) F General equilibrium analysis.
