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How Robust is Comparative Advantage?

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  • Alan V. Deardorff

Abstract

This paper reviews the theoretical development of the concept of comparative advantage, starting with the two‐good model of Ricardo and the two‐good extension and reinterpretation by Haberler. In both, the presence of comparative advantage provides the scope for countries to gain from trade by specializing, and the pattern of that trade is explained by the pattern of comparative advantage. These strong results of the two‐good model can be extended under certain circumstances to multiple goods and countries, but under more general assumptions such strong results no longer are assured. Instead one can derive much weaker results, usually in the form of correlations between comparative advantage and trade, and these weaker results hold in a much wider variety of circumstances. The paper examines those assumptions that permit such generalizations, but then also examines when those assumptions are most likely to fail, and what happens as a result.

Suggested Citation

  • Alan V. Deardorff, 2005. "How Robust is Comparative Advantage?," Review of International Economics, Wiley Blackwell, vol. 13(5), pages 1004-1016, November.
    • Handle: RePEc:bla:reviec:v:13:y:2005:i:5:p:1004-1016
    DOI: 10.1111/j.1467-9396.2005.00552.x
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    Cited by:

    1. Escaith, Hubert & Khorana, Sangeeta, 2020. "Mapping the Commonwealth Countries’ Participation in Global Value Chains," MPRA Paper 104441, University Library of Munich, Germany.
    2. repec:prg:jnlwep:v:2015:y:2015:i:2:id:126:p:125-144 is not listed on IDEAS
    3. Costinot, Arnaud & Komunjer, Ivana, 2006. "What Good Do Countries Trade? New Ricardian Predictions," University of California at San Diego, Economics Working Paper Series qt9t9818ng, Department of Economics, UC San Diego.
    4. Leppälä, Samuli & Desrochers, Pierre, 2010. "The division of labor need not imply regional specialization," Journal of Economic Behavior & Organization, Elsevier, vol. 74(1-2), pages 137-147, May.
    5. French, Scott, 2017. "Revealed comparative advantage: What is it good for?," Journal of International Economics, Elsevier, vol. 106(C), pages 83-103.
    6. Dogaru, Vasile, 2005. "Some observations regarding the demythification of the comparative advantage’s principle within Manoilescu generalized scheme," MPRA Paper 6918, University Library of Munich, Germany.
    7. Dogaru, Vasile, 2005. "The general validity of comparative advantage in trade exchanges," MPRA Paper 6882, University Library of Munich, Germany.
    8. Warziniack, Travis W. & Finnoff, David & Shogren, Jason F., 2013. "Public economics of hitchhiking species and tourism-based risk to ecosystem services," Resource and Energy Economics, Elsevier, vol. 35(3), pages 277-294.
    9. Agus Harimurti Yudhoyono & Fendy Suhariadi & Elisabeth Supriharyanti & Zulkifli Nurul Haqq, 2024. "Economic Transformation: A Systematic Literature Review," Sustainability, MDPI, vol. 16(24), pages 1-16, December.
    10. Heitor Pellegrina & Sebastian Sotelo, 2019. "Migration, Specialization and Trade: Evidence from the Brazilian March to the West," 2019 Meeting Papers 863, Society for Economic Dynamics.
    11. Ufuk Gunes Bebek, 2011. "Monotonicity of additive indices of revealed comparative advantage," Economics Bulletin, AccessEcon, vol. 31(2), pages 1894-1901.
    12. Dvoskin, Ariel & Ianni, Guido, 2021. "Produced means of production and the chain of comparative advantages," Structural Change and Economic Dynamics, Elsevier, vol. 59(C), pages 635-647.
    13. Mark Lutz, 2008. "Revisiting the Relevance of International Trade Theory," Forum for Social Economics, Taylor & Francis Journals, vol. 37(2), pages 147-164, January.
    14. Baboo M Nowbutsing, 2011. "Fragility of Comparative Advantage in Higher Dimensions: An Experimental Investigation," Journal of Economics and Behavioral Studies, AMH International, vol. 2(4), pages 151-170.
    15. Takeshi Ogawa, 2013. "Application of Jones' Inequality to the n-country, m-good Ricardo–Graham Model," Economics Bulletin, AccessEcon, vol. 33(1), pages 379-387.
    16. Makoto Tawada & Nobuhito Suga & Akihiko Yanase, 2022. "Government, trade and comparative advantage, revisited," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 55(2), pages 1135-1165, May.
    17. Mark Lutz, 2008. "Revisiting the Relevance of International Trade Theory," Forum for Social Economics, Springer;The Association for Social Economics, vol. 37(2), pages 147-164, August.
    18. Wignaraja, Ganeshan, 2008. "Foreign ownership, technological capabilities and clothing exports in Sri Lanka," Journal of Asian Economics, Elsevier, vol. 19(1), pages 29-39, February.
    19. Wignaraja, Ganeshan, 2008. "FDI and Innovation as Drivers of Export Behaviour: Firm-level Evidence from East Asia," MERIT Working Papers 2008-061, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).

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