Absolute Advantage vs. Comparative Advantage

In your opinion, in what way was Ricardo’s law of comparative advantage superior to Smith’s theory of absolute advantage?

                I will begin this topic with each explanation of absolute advantage and comparative advantage. Absolute advantage is the advantage which is earned by a country because of its own specialization and when there’s an extra goods, they’re focusing in it. Absolute advantage uses Labor Theory of Value. For example is Japan produce 6 units of clothing per work day while US produce 12 units and Japan produce 3 units of foods per work day while US produce 4 units. Here’s the table that I got from http://analystnotes.com/cfa-notes-describe-benefits-and-costs-of-international-trade.html:  

 It can be seen from the table that US has the absolute advantage, but if it applicable for all of goods, there will be no international trade. Besides, the Adam Smith’s theory is against mercantilist assumption (because Adam Smith developed the idea of capitalism in his book titled The Wealth of Nations) which gives states positive sum game. Next is comparative advantage by David Ricardo. Comparative advantage supports efficiency by producing more goods with a lower opportunity cost. It doesn’t matter with the absolute advantage of a country, what really matter is the comparative advantage. The system is like this, country A will produce lower cost goods in their country, but if it requires extra cost (more expensive) to process any goods in A, they’d rather import it from others (country B). Here’s a diagram for comparative advantage that I got from http://www.sy-econ.org/sse/sse-ITF-AACA.html:

Conclusion is that comparative advantage is more efficient or superior than absolute advantage cause it is more favorable in the way of amounts, trading and costs. It also keeps the international trade going between countries until now.

Athilla Meidictine Johanita

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