Trade encourages nations to specialize in their "comparative advantage" and trade with other nations that specialize in theirs.
Free trade is built on the law of comparative advantage: everyone benefits when everyone can offer what they do best and most efficiently.
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Question: are you admitting that the concept of comparative advantage is necessary to vindicate free trade?
At first blush, real-world trade patterns would seem to challenge the theory of comparative advantage.
Traditional trade theory, based on the ideas of David Ricardo, a 19th-century economist, argues that economies gain from trade by specialising in products where they have a comparative advantage.
According to Ricardo's theory, both countries will be better off if each specialises in the industry where it has a comparative advantage, and if the two trade with one another.
In essence, the theory of comparative advantage says that it pays countries to trade because they are different.
The City's comparative advantage is clear from Britain's trade balance.
It is not necessary to invoke comparative advantage in order to defend such global free trade.
In that case, no country would have a comparative advantage, and hence there would be no trade.
While international trade moves our jobs into more productive activities, takes advantage of our comparative advantage, makes our labor force as a whole more productive, it does not necessarily create more jobs than it destroys in the short term.
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Trade moves labor and other resources from areas of our comparative disadvantage to areas of our comparative advantage and thus increases production available for consumption by all.
Just as trade delivers overall gains to developed economies by allowing them to specialise in activities in which they have a comparative advantage, so does offshoring.
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