Autor: Streb Jorge
JEL: B12, B31
Adam Smith is credited with a theory of international trade based on absolute advantages. My reading of Wealth of Nations leads to think otherwise. In my view, Adam Smith already has a theory of comparative advantage that derives from what he sees as a main motor that drives productivity growth, namely, the progress of the division of labor. His theory is hence based on acquired advantages, rather than on natural advantages that are exogenously given as in Ricardo’s theory of comparative advantage. Furthermore, while Ricardo’s has a blackboard example where Portugal is more productive than England both in the production of cloth and wine, Smith’s example in chapter 1 of Book I on Poland, France and England is instead consistent with the historical facts of his times.