Reconciling Ricardo’s Comparative Advantage with Smith’s Productivity Theory
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There are three main claims in this paper: First, there is sufficient evidence for affirming that Ricardo adhered to Smith’s productivity theory; second, Ricardo’s original demonstration of the comparative-advantage proposition is indeed compatible and complementary with respect to the latter; and third, Ricardo agreed with Smith’s multifactorial explanation of the pattern of trade, which includes increasing returns and economies of scale.
These results open the way for the reincorporation of Ricardo’s propositions into Smith’s multifactorial explanation of trade patterns. They also add a new perspective to the ongoing process of reassessment of Smith’s contributions to international trade theory, further strengthening the view that he was indeed a great international trade theorist.