Some empirical evidence regarding Ricardo''s theory of comparative advantage



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This study Is an attempt to verify the classical theory of comparative advantage as an explanation for the patterns of world trade in manufactured goods. Data from various United Nations sources are utilized to arrive at values for relative labor productivity and relative export values for thirteen industrial categories for a total of twenty-four countries. Correlation coefficients are computed for regressions on relative labor productivity and relative export performance for these countries. An effort is made to establish a pattern in the results obtained through consideration, of such factors as per capita income, average differences in labor productivity, and average wage levels. It is concluded that the relatively poor results obtained are due primarily to the use of insufficiently detailed data.



Theory of comparitive advantage