Comparative advantage — and the modern critiques

Ricardo's comparative-advantage argument is a theorem. Like all theorems, it's true if its assumptions hold. The modern critiques are about the assumptions, not the math.

Free trade raises total income; whether it raises your income depends on whether you can move into the export sectors and how fast they hire. The textbook is right about gains-from-trade and silent about distribution — which is why most trade debate is incoherent.

Capital is sector-specific

transition costs

Learning-by-doing

first-mover wins

Agglomeration

winner-take-all

Political adjustment

losers get nothing