Comparative advantage
Jump to navigation
Jump to search
In economics, the principle of comparative advantages explains how any country can benefit from free trade, whether it has absolute advantages or not. This principle has been developped by Robert Torrens in 1815, and demonstrated in David Ricardo's Principles of political economy and taxation in 1817.
According to this theory, a country should always chose free trade, and specializes itself in the production for which it has a better opportunity cost than its partners.