The Missing “Comparative Advantage” in US-Sino Economy

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In this wave of globalization, you may have heard a lot of noise about “Comparative Advantage”. Do you know the origin of this concept? Who created this concept and when? Maybe you have guessed it. This is a very old concept in economics emerging in the leading study of English economist David Ricardo in 1817 on international trade. When he was reflecting upon and developing his elegant theory of Comparative Advantage in his times, he could hardly imagine the superpower of human beings to change this planet and produce whatever we want today, and probably neither could he imagine the exploding growth of human population on this planet today. Therefore, in his theory there is an important presumption that overall productivity of human societies is too low to satisfy the overall needs of human beings and labor markets are tight in all nations. This presumption obviously fails to fit in today’s reality of international trade. Given its huge population and available productivity today, China alone may produce enough commodities to support half the world, if running in its full capacity of production.

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This entry was posted in Letters to USA, People's Diplomacy, Political Economy of Democracy, Political Economy of Knowledge, Innovation, and Human Development. Bookmark the permalink.

One Response to The Missing “Comparative Advantage” in US-Sino Economy

  1. Pingback: Some More True Human Beings « Anonymiss Express

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