Title: Why the theory of comparative advantage is wrong
Authors: Ian Fletcher
Addresses: Coalition for a Prosperous America, 700 12th St. NW, Suite 700, Washington, DC 20005, USA
Abstract: The theory of comparative advantage is widely misunderstood to demonstrate the universal superiority of free trade. In fact, the theory depends upon a number of key assumptions and fails if they are relaxed. Empirically, many of these assumptions are highly questionable, if not demonstrably false. Among them are an absence of externalities, a lack of international capital mobility, and no income-inequality effects. Also included are assumptions about optimal short- and long-term growth strategies being identical and domestic factor mobility being costless.
Keywords: free trade; comparative advantage; David Ricardo; competitiveness; international trade; factor mobility; capital mobility; income inequality; externalities; international capital; short-term growth; long-term growth; optimal strategies; domestic factors; costless mobility; economics; economic theories.
DOI: 10.1504/IJPEE.2011.046029
International Journal of Pluralism and Economics Education, 2011 Vol.2 No.4, pp.421 - 429
Published online: 29 Jan 2015 *
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