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

we must be able to distinguish between absolute and comparative advantage.

A country has an absolute advantage over another country in producing a good if it uses fewer resources to

produce that good. Absolute advantage can be the result of a country’s natural endowment. For example,

extracting oil in Saudi Arabia is pretty much just a matter of “drilling a hole.” Producing oil in other countries

can require considerable exploration and costly technologies for drilling and extraction—if they have any oil at

all. The United States has some of the richest farmland in the world, making it easier to grow corn and wheat

than in many other countries. Guatemala and Colombia have climates especially suited for growing coffee.

Chile and Zambia have some of the world’s richest copper mines. As some have argued, “geography is destiny.”
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