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Reconciling Ricardo’s Comparative Advantage with Smith’s Productivity Theory

Morales Meoqui, Jorge (2010): Reconciling Ricardo’s Comparative Advantage with Smith’s Productivity Theory.

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Abstract

There are three important claims in this paper: First, there is solid evidence for affirming that Ricardo adhered to Smith’s productivity theory; second, Ricardo’s original demonstration of the comparative-advantage proposition is indeed compatible and complementary with respect to the later; and third, absolute and comparative advantage are not necessarily mutually exclusive propositions. These three claims are the result of the accurate interpretation of the four numbers in Ricardo’s famous demonstration of the comparative-advantage proposition as number of men working for a year required to produce some unspecified amounts of wine and cloth traded between England and Portugal. They add a new perspective to the ongoing process of reassessment of Smith’s contributions to international trade theory, further strengthening the view that he was indeed a great international trade theorist.

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