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How Robust is Comparative Advantage?


  • Alan V. Deardorff


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. Copyright 2005 International Monetary Fund.

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

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    References listed on IDEAS

    1. Deardorff, Alan V., 1979. "Weak links in the chain of comparative advantage," Journal of International Economics, Elsevier, vol. 9(2), pages 197-209, May.
    2. Dornbusch, Rudiger & Fischer, Stanley & Samuelson, Paul A, 1977. "Comparative Advantage, Trade, and Payments in a Ricardian Model with a Continuum of Goods," American Economic Review, American Economic Association, vol. 67(5), pages 823-839, December.
    3. Deardorff, Alan V., 2005. "Ricardian comparative advantage with intermediate inputs," The North American Journal of Economics and Finance, Elsevier, vol. 16(1), pages 11-34, March.
    4. Ronald W. Jones, 1961. "Comparative Advantage and the Theory of Tariffs: A Multi-Country, Multi-Commodity Model," Review of Economic Studies, Oxford University Press, vol. 28(3), pages 161-175.
    5. Deardorff, Alan V, 1980. "The General Validity of the Law of Comparative Advantage," Journal of Political Economy, University of Chicago Press, vol. 88(5), pages 941-957, October.
    6. Courant, Paul N & Deardorff, Alan V, 1992. "International Trade with Lumpy Countries," Journal of Political Economy, University of Chicago Press, vol. 100(1), pages 198-210, February.
    7. Alan Deardorff, 1994. "Exploring the limits of comparative advantage," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 130(1), pages 1-19, March.
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    Cited by:

    1. 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.
    2. 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.
    3. Wignaraja, Ganeshan, 2008. "FDI and Innovation as Drivers of Export Behaviour: Firm-level Evidence from East Asia," MERIT Working Papers 061, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    4. repec:eee:inecon:v:106:y:2017:i:c:p:83-103 is not listed on IDEAS
    5. 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.
    6. French, Scott, 2017. "Revealed comparative advantage: What is it good for?," Journal of International Economics, Elsevier, vol. 106(C), pages 83-103.
    7. Ufuk Gunes Bebek, 2011. "Monotonicity of additive indices of revealed comparative advantage," Economics Bulletin, AccessEcon, vol. 31(2), pages 1894-1901.
    8. 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.
    9. Dogaru, Vasile, 2005. "The general validity of comparative advantage in trade exchanges," MPRA Paper 6882, University Library of Munich, Germany.
    10. 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.
    11. 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.
    12. 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.

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