Global flows of goods and financial capital were rebuilt only slowly after World War II. It was not until the early

1980s that global economic forces again became as important, relative to the size of the world economy, as

they were before World War I.

19.1 Absolute and Comparative Advantage

LEARNING OBJECTIVES

By the end of this section, you will be able to:

• Define absolute advantage, comparative advantage, and opportunity costs

• Explain the gains of trade created when a country specializes

The American statesman Benjamin Franklin (1706–1790) once wrote: “No nation was ever ruined by trade.”

Many economists would express their attitudes toward international trade in an even more positive manner.

The evidence that international trade confers overall benefits on economies is pretty strong. Trade has

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