Explain briefly the theory of comparative advantage.

Explain briefly the theory of comparative advantage.

The theory of comparative advantage is introduced bx the British economist David Ricardo. It holds that even if a country is less efficient than another in the production of both commodities (assume thay there are only two countries producing two commodities), there is still a basis for mutually beneficial trade. The first country should specialize in the production and export of the commodity in which its absolute disadvantage is smalleand import the commodity in which his absolute disadvantage is greater.