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David Ricardo’s Comparative Advantage Theory July 29, 2008

Posted by petrarcanomics in PPC & Comparative Advantage.
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David Ricardo’s comparative advantage theory is the greatest academic argument for the benefits of free trade. His theory is so relevant to the exponential growth of globalization and free trade that we are experiencing in today’s world. It has brought many people across the globe out of poverty, but has also brought us the secondary effect of a deteriorating environment.

Comparative advantage proves that voluntary trade between partners will undoubtedly cause increases in production for both sides, even if one side has the absolute advantage in productivity in both products.

For more informtion and a more thorough explanation on comparative advantage, see the video below.

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