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 *

Full-text access for editors Full-text access for subscribers Purchase this article Comment on this article