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To accomplish this, labour would have to move from the comparative disadvantaged industry into the comparative advantage industry.
One striking result here is that even when one country is technologically superior to the other in both industries, one of these industries would go out of business when opening to free trade. Thus, technological superiority is not enough to guarantee continued production of a good in free trade. A country must have a comparative advantage in production of a good, rather than an absolute advantage, to guarantee continued production in free trade
The movement to free trade generates an improvement in welfare in both countries both individually and nationally...
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Common topics in this essay:
- Explain why the theory of comparative advantage is the basis for international trade (mutual benefit from trade).
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