accompanied economic growth in the United States and around the world. Many of the national economies

that have shown the most rapid growth in the last several decades—for example, Japan, South Korea, China,

and India—have done so by dramatically orienting their economies toward international trade. There is no

modern example of a country that has shut itself off from world trade and yet prospered. To understand the

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19.1 • Absolute and Comparative Advantage 451

benefits of trade, or why we trade in the first place, we need to understand the concepts of comparative and

absolute advantage.

In 1817, David Ricardo, a businessman, economist, and member of the British Parliament, wrote a treatise

called On the Principles of Political Economy and Taxation. In this treatise, Ricardo argued that specialization

and free trade benefit all trading partners, even those that may be relatively inefficient. To see what he meant,
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