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Competitive and Comparative Advantage: Towards a Unified Theory of International Trade

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  • Bernard C. Beaudreau

Abstract

The field of international business/economics is largely dualistic in nature. On one hand is the economics literature which has, for two centuries, focused on the notion of comparative advantage (technology, factor proportions) while on the other is the business literature which has recently developed the concept of competitive advantage. This paper presents a reconciliation of the two based on global value chain/supply chain analysis and the concept of vertical comparative advantage. It is shown that the theory of competitive advantage's epistemological comparative advantage lies with its ‘how to’ approach to developing an advantage, while the theory of comparative advantage's epistemological comparative advantage lies with its account of ‘what is’ and that both are complementary. However, it is also argued that the failure to recognize this complementarity as well as the shortcomings of each have prevented and continue to prevent the emergence of an integrated, empirically-consistent theory of international trade -- in short, prevented us from taking advantage of the gains from epistemological trade.

Suggested Citation

  • Bernard C. Beaudreau, 2016. "Competitive and Comparative Advantage: Towards a Unified Theory of International Trade," International Economic Journal, Taylor & Francis Journals, vol. 30(1), pages 1-18, March.
    • Handle: RePEc:taf:intecj:v:30:y:2016:i:1:p:1-18
    DOI: 10.1080/10168737.2015.1136664
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    References listed on IDEAS

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    8. Bernard C. Beaudreau, 2013. "What the OECD-WTO TiVA Data Tell Us about Comparative Advantage and International Trade in General," The International Trade Journal, Taylor & Francis Journals, vol. 27(5), pages 465-481, December.
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    Cited by:

    1. Ramadhanty, Shafitri Arindya, 2020. "Comparative Advantage as a Bargaining Chip in Global Value Chain: Indonesia Rattan Industry," OSF Preprints 8e9h5, Center for Open Science.

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