advantage. It is certainly not employed to the greatest advantage, when it is thus directed towards
an objective which it can buy cheaper than it can make (Smith, 1776, pp. 478-479).
Put simply, Smith’s view was that whereas one country may be able to produce more than
one good to its beneﬁt, where it will be cheaper to purchase one such good from another
country than to produce thegood itself, it is even more beneﬁcial and indeed prudent for the
ﬁrst country to purchase cheaply.
By the nineteenth century, another economist David Ricardo had expanded on Smith’s
view and proposed what is now referred to as the “principle of comparative advantage”.
This principle holds that “each country will beneﬁt if it specialises in the production and
export of those goods that it can produce at relatively low cost”(Samuelson and Nordhaus,
1998, p. 689). In other words, “each country will beneﬁt if it imports those goods which it
produces at relatively high cost”(Samuelson and Nordhaus, 1998, p. 689). The WTO
embraced the postulations of Ricardo holding it out it as “the single most powerful insight
into economics”(WTOa,1990). It presents the case for open trade:
But what if a country is bad at making everything? Will trade drive all producers out of business?
The answer, according to Ricardo, is no. The reason is the principle of comparative advantage.
It says, countries A and B still stand to beneﬁt from trading with each other even if A is better
than B at making everything. If A is much more superior at making automobiles and only slightly
superior at making bread, then A should still invest resources in what it does best –producing
automobiles –and export the product to B. B should still invest in what it does best –making
bread –and export that product to A, even if it is not as eﬃcient as A. Both would still beneﬁt
from the trade. A country does not have to be best at anything to gain from trade. That is
It is often claimed, for example, that some countries have no comparative advantage in anything.
That is virtually impossible (WTOb, 1990).
The WTO is correct to the extent that it isimpossible to claim in absolute terms, that some
countries have no comparative advantage.The limitation to the assertion of the rules-based
system is that the impossibility must surely only refer to a wrong presumption on the
question of potential: thatis, that a country cannot produce anything. Every country with its
human capital, can by acting on itsinitiative develop opportunities and exploit its potentials
towards developing comparative advantage. At the level of actual trade capacity, if
countries do not engage activelyin building a trade capacity whether for goods or services,
no amount of economic theory can negate the evidence that for non-producing counties, a
comparative advantage is virtually impossible. Why is this so? This is because in practical
terms, and this is the crucial factor,some countries hardly have anything traded in the open
market because they do not produce those goods and services that others want, or are
encouraged, to buy. There are a myriad of factors for this but the main contributor is the
absence of dedicated investment (human and capital) in growing a sustainable trade
capacity for goods and services.
Modern life offers its own evidence of the challenges that confront a country in the
development of a comparative advantage. From an international perspective, political
upheavals, running conﬂicts, wars, internal displacement, migration and economicﬂux are
huge problems that impede investments in trade. Domestic and regional factors are also
signiﬁcant inhibitors to trade, often neglected in the global discourses on growing
comparative advantage.Poor education and skills capacity in the labourforce, bad economic
policies, insecurity, poor political relations across regions, inefﬁcient bureaucratic systems,