In economics, what principle says countries should specialize in goods with the lowest opportunity cost?

In economics, comparative advantage says countries should specialize in goods with the lowest opportunity cost.

David Ricardo developed the principle in the early 19th century, most famously in his 1817 book *On the Principles of Political Economy and Taxation*. A country can benefit from trade even if it is more productive than another country in producing every good, provided their relative opportunity costs differ.

Specialization based on comparative advantage allows total production to rise, creating the possibility of mutually beneficial trade. The gains depend on the terms of trade and on resources being able to move or adapt sufficiently within economies.

Comparative advantage is often confused with absolute advantage. Absolute advantage concerns producing more output with the same resources; comparative advantage concerns what must be sacrificed to produce one additional unit. Real-world trade can also involve transport costs, tariffs, adjustment costs, and strategic policy.