ABSTRACT
The theory of comparative advantage that we outlined in Chapter 1 suggests that it will benefi t a country to produce domestically those products in which it has a comparative advantage and import those in which other countries have a comparative advantage. While the theory shows how a country that does not have an absolute advantage in anything will still be able to export and benefi t from trade, it by no means demonstrates that the value of a country’s exports of products in which it has a comparative advantage will equal the value of imports in which it has a comparative disadvantage.
