Realistic Extensions and Qualifications

In the reasonable dialog of economics, critics made several points that seem to undercut the theory of comparative advantage. Some of these points have to do with the simplifying assumptions, and can be taken care of by making the discussion a little more complex. Others bite more deeply and may point up aspects of international trade that the simple theory does not consider. In the next few pages, we will consider the following points:

• Labor is not really the only productive resource
• The theory doesn't really tell us what the prices will be in international trade
• Countries produce many more than two goods
• Countries may import and export the same goods
• The theory ignores monopoly
• The theory ignores unemployment
• Even if the theory is correct, international trade is not really symmetrical

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