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Why the theory of comparative advantage is wrong

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  • Ian Fletcher

Abstract

The theory of comparative advantage is widely misunderstood to demonstrate the universal superiority of free trade. In fact, the theory depends upon a number of key assumptions and fails if they are relaxed. Empirically, many of these assumptions are highly questionable, if not demonstrably false. Among them are an absence of externalities, a lack of international capital mobility, and no income-inequality effects. Also included are assumptions about optimal short- and long-term growth strategies being identical and domestic factor mobility being costless.

Suggested Citation

  • Ian Fletcher, 2011. "Why the theory of comparative advantage is wrong," International Journal of Pluralism and Economics Education, Inderscience Enterprises Ltd, vol. 2(4), pages 421-429.
    • Handle: RePEc:ids:ijplur:v:2:y:2011:i:4:p:421-429
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    Cited by:

    1. Evans, Olaniyi, 2019. "The effects of US-China trade war and Trumponomics," MPRA Paper 93682, University Library of Munich, Germany.

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