by Ian Fletcher
Real-World Economics Review, Issue No. 54, December 2010 –
[An excerpt reads]: The theory of comparative advantage is the core of the case for free trade. However, contrary to orthodox myth, this theory is crippled by the dubious assumptions upon which it depends. . . .
The flaws of the theory of comparative advantage consist in a number of dubious assumptions it makes. To wit:
Assumption #1: Trade is sustainable. . . .
Assumption #2: There are no externalities. . . .
Assumption #3: Factors of production move easily between industries. . . . .
Assumption #4: Trade does not raise income inequality. . . .
Assumption #5: Capital is not internationally mobile. . . .
Assumption #6: Short-term efficiency causes long-term growth. . . .
Assumption #7: Trade does not induce adverse productivity growth abroad. . . .
>>Read the full Article here (Fletcher55.pdf).
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