Ricardo's Law

Paper Summary:

The paper defines David Ricardo's theory of comparative advantage, known as Ricardo's law. The paper looks at its strengths and weaknesses and compares Ricardo's original theory to today's international trade theory.

From the Paper:

"David Ricardo is regarded as one of Britain's greatest economists. He was important in the development of economic theory especially in the "classical system" of political economy. He was rare in that he was able to have both wealth and a famous legacy through economics. His background is as interesting as his achievements in economics. One of his most important findings is in the "theory of comparative advantage", a theory that is popularly known as Ricardo's law. The theory of comparative advantage is one of the most important concepts of international trade."

Sample of Sources Used:

• "A Brief History of the Concept of Comparative Advantage," by Morgan Rose.
• "Comparative Advantage, by Dwight Lee. The Freeman, 1999.
• Principles of Economics, by Gregory Mankiw. Chapter 3, Interdependence and the Gains from Trade

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