Economists love to talk about the theory of comparative advantage, which holds (somewhat counterintuitively) that two countries trading with each other will be better off if each specializes in what ...

David Ricardo, a Scottish economist, made a perceptive observation that a few individuals, firms, or countries can gain from trading, even if one of them is objectively the best in all activities.

In the early 19th century David Ricardo formulated the principle of comparative advantage to explain mutual gains from trade among countries. He based it on a critical assumption: that capital did not ...