Economist David Ricardo explained the theory of comparative advantage in his 1817 book On the principles of political economyand taxation using an example of England and Portugal. Portugal produces wine and cloth with less labour than is needed in England. Yet it is productive for Portugal to produce more wine than cloth, and for England to produce less wine than cloth, because more of both goods is produced. Both countries trade and both gain as the quantity of each good produced rises.
Using this item
This item has been provided for private study purposes (such as school projects, family and local history research) and any published reproduction (print or electronic) may infringe copyright law. It is the responsibility of the user of any material to obtain clearance from the copyright holder.