David Ricardo developed the theory of comparative advantage in international trade.
Ricardo presented the theory in his 1817 book On the Principles of Political Economy and Taxation. It shows that two countries can gain from trade even when one country is more productive in making every product. The key is opportunity cost: each country should specialize relatively more in goods it can produce at a lower opportunity cost and trade for the rest.
This differs from absolute advantage, which concerns who can produce more output with the same resources. Comparative advantage instead compares what must be sacrificed to produce an additional unit. Ricardo’s famous numerical example used England and Portugal producing cloth and wine.
The model assumes conditions such as trade being possible and resources being able to move within countries but not freely between them. Real-world trade can create distributional effects, adjustment costs, and environmental concerns, so aggregate gains from trade do not guarantee that every individual benefits equally.