ABSTRACT
This chapter explores the intellectual history of comparative advantage, tracing its roots, early insight, discovery, formulation, extensions, and applications. It deserves the central place in this intellectual odyssey similar to the role of Adam Smith in the invisible-hand proposition. The intensity and composition of foreign trade as well as commercial policies and international relations have played important roles in the development of trade theories. The theory implies that under free trade all economies gain from trade and no economy gains at the expense of another economy. The chapter discusses the three periods prior to the formulation of the theory of comparative advantage are classical antiquity; mercantilist theories of foreign trade; and relatively advanced theories. It presents the writings of Henry Martyn, David Hume, and Adam Smith, who advanced the most influential and sophisticated analysis of trade theory in the eighteenth century and prepared the path for the discovery of comparative advantage.
