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The Theory Of Comparative Advantage

Trade

new internationalist
issue 204 - February 1990

The THEORY of
COMPARATIVE ADVANTAGE

Illustrated by Clive Offley.

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1 Jane Marcet's Conversations on Political Economy was published a year before millionaire stockbroker and entrepreneur David Ricardo brought out his Principles of Political Economy and Taxation. This contained his 'Theory of Comparative Advantage', on which his great fame and influence as an economist were to rest. The theory still forms part of economic orthodoxy today. But the woman who grasped the idea first has been given no credit.

2 A modern version of the theory of comparative advantage in action would be Hong Kong's use of its cheaper labour to gain a trading advantage over Western industrial countries. It is unlikely, however, that Mrs Marcet's optimistic view of world trade would be shared by developing countries who can find no 'comparative advantage' which will lead them out of the poverty trap.

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New Internationalist issue 204 magazine cover This article is from the February 1990 issue of New Internationalist.
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