ABSTRACT
The economist David Ricardo was instrumental in developing the idea through ‘The theory of comparative advantage’ that free trade could bring greater economic benefits to those involved than a position of no trade. The essentials of his argument were that different countries had different resource mixes and therefore differing costs for producing a range of goods and services. It therefore pays countries not to attempt to be self-sufficient in producing a complete range of goods and services but to specialize in those where its production costs are lowest and their production efficiency highest. They would then trade with other countries to meet their full range of demands. Ricardo argued that specialization and trade would lead to an increase in total output compared to a position of no specialization and trade, based upon greater efficiency of production.
