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Absolute Advantage and International Trade

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  • Stergios A. Seretis
  • Persefoni V. Tsaliki

Abstract

The purpose of this paper is to give empirical content to the approach of international trade based on the principle of absolute advantage and to show that differences in productivity may give rise to transfers of value towards the units of capital with an absolute advantage in production. Our approach is based on the classical/Marxian theories of value and competition and it is operationalized using input-output data for the years 1995, 2000, and 2005 of four euro-zone countries (Greece, Spain, Finland, and the Netherlands). The derived results are consistent with the view that productivity differences persist over the years, which is equivalent to saying that the absolute advantage in production does not change into comparative advantage.

Suggested Citation

  • Stergios A. Seretis & Persefoni V. Tsaliki, 2016. "Absolute Advantage and International Trade," Review of Radical Political Economics, Union for Radical Political Economics, vol. 48(3), pages 438-451, September.
    • Handle: RePEc:sae:reorpe:v:48:y:2016:i:3:p:438-451
    DOI: 10.1177/0486613415603160
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    References listed on IDEAS

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    1. L. ALAN WINTERS & NEIL McCULLOCH & ANDREW McKAY, 2015. "Trade Liberalization and Poverty: The Evidence So Far," World Scientific Book Chapters, in: Non-Tariff Barriers, Regionalism and Poverty Essays in Applied International Trade Analysis, chapter 14, pages 271-314, World Scientific Publishing Co. Pte. Ltd..
    2. Krugman, Paul, 1998. "What's New about the New Economic Geography?," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 14(2), pages 7-17, Summer.
    3. Deraniyagala, Sonali & Fine, Ben, 2001. "New Trade Theory versus Old Trade Policy: A Continuing Enigma," Cambridge Journal of Economics, Oxford University Press, vol. 25(6), pages 809-825, November.
    4. Stergios A. Seretis & Persefoni V. Tsaliki, 2012. "Value transfers in trade: an explanation of the observed differences in development," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 39(12), pages 965-982, October.
    5. Lefteris Tsoulfidis & Dimitris Paitaridis, 2009. "Chapter 8 On the labor theory of value: statistical artefacts or regularities?," Research in Political Economy, in: Why Capitalism Survives Crises: The Shock Absorbers, pages 209-232, Emerald Group Publishing Limited.
    6. Lefteris Tsoulfidis & Persefoni Tsaliki, 2005. "Marxian Theory of Competition and the Concept of Regulating Capital: Evidence from Greek Manufacturing," Review of Radical Political Economics, Union for Radical Political Economics, vol. 37(1), pages 5-22, March.
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    Cited by:

    1. Cajas-Guijarro, John & Pérez-Almeida, Bryan, 2021. "Comercio, sobreexplotación laboral y ciclos en la periferia: una propuesta teórica y el caso ecuatoriano desde un modelo PVAR. || Trade, super-exploitation of labor power and cycles in the periphery: ," Revista de Métodos Cuantitativos para la Economía y la Empresa = Journal of Quantitative Methods for Economics and Business Administration, Universidad Pablo de Olavide, Department of Quantitative Methods for Economics and Business Administration, vol. 31(1), pages 161-197, June.
    2. Ivan Rubinic & Maks Tajnikar, 2019. "The Influence of the Economic Cycle on Eurozone Cross-Country Inequality Dynamics," South-Eastern Europe Journal of Economics, Association of Economic Universities of South and Eastern Europe and the Black Sea Region, vol. 17(2), pages 267-290.
    3. Luis Daniel Torres-Gonzalez & Jacobo Ferrer-Hernandez & Adrian Martınez, 2022. "On the Long-Run Neutrality of Profits-Wages Ratios in the Determination of International Relative Prices Under Absolute Advantages," Working Papers 2208, New School for Social Research, Department of Economics.

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    More about this item

    Keywords

    absolute and comparative advantage principle; theories of value and competition; productivity differentials; transfers of value;
    All these keywords.

    JEL classification:

    • B12 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Classical (includes Adam Smith)
    • B14 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Socialist; Marxist
    • B51 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Socialist; Marxian; Sraffian
    • D46 - Microeconomics - - Market Structure, Pricing, and Design - - - Value Theory
    • F10 - International Economics - - Trade - - - General
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State

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