Abstract
In this text, Joseph M. Grieco and G. John Ikenberry are explaining one of the main economic theories, the comparative advantages theory of Ricardo. This theory is actually very simple. Ricardo showed that countries would gain to specify themselves in the production of one good and to use trade in order to acquire the others. In his theory, Ricardo used the example England and Portugal producing sheets and wine. He demonstrated that even if each country had an absolute advantage in the production of one of those two goods, each of them would benefit from specializing themselves in the production of what they can do the best; this is called, in economics terms, the maximization of their comparative advantages. Obviously, the prerequisite for this theory to work as such is a world with only two goods and two actors. However, this theory explains us why countries will always benefit from trade. Actually, considering this theory for the first time, one would inevitably say that if one of the two countries is able to produce more of both goods than the other one, he wouldn't gain to trade with the second one, and would thus logically stay in autarchy in order to benefit of its absolute advantage.
This analysis would actually suit a realist theorist of the international relations, who believes that countries only care about their absolute gains. However, according to Ricardo, even if a country has an absolute advantage, it would gain to trade with so called weaker countries in order to maximize its relative advantage and thus to reduce its opportunity costs. This would lead both of the countries (even the stronger one) to enjoy more satisfaction, because they would both be able to get more of each of the two goods.
