David Ricardo: The Principles of Political Economy

Why would a massive, powerful country like the United States of America bother to trade with a tiny, less powerful country like Mauritius?

Professor Sir David Greenaway discusses how the concept of comparative advantage – an idea espoused by the famous political economist David Ricardo – enables countries of all sizes to trade one with another. Specialization and exchange provide the foundations for beneficial foreign trade.

Please comment below whether you think comparative advantage plays a relevant role in today’s economies. Are the gains from trade equally distributed to powerful and less powerful countries?