Critically discuss the Ricardian theory of Comparative Advantage. How is it different from Adam Smith’s theory of Absolute Advantage? 

The Ricardian theory of comparative advantage is one of the fundamental principles in international trade that seeks to explain how and why countries benefit from trading with each other. Developed by the British economist David Ricardo in the early 19th century, the theory builds upon the classical ideas of international trade, but it introduces a more nuanced and broad perspective compared to the earlier concept of absolute advantage proposed by Adam Smith.

At its core, the Ricardian theory asserts that even if a country does not have an absolute advantage in producing any goods (meaning it is less efficient than other countries in producing all goods), it can still benefit from trade. The key idea behind Ricardo’s theory is that a country should specialize in producing and exporting the goods in which it has the lowest opportunity cost, and import the goods in which it has a higher opportunity cost. This concept is called comparative advantage.

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