Absolute advantages and capital mobility in international trade theory

Enrico Bellino and Saverio Fratini

The European Journal of the History of Economic Thought, 2022, vol. 29, issue 2, 271-293

Abstract: Capital mobility has the potential of undermining the validity of Ricardo’s theory of comparative advantage. Within this context, the tendency towards a uniform rate of profit makes absolute costs relevant for the analysis of specialisation patterns. A historical and analytical reconstruction is presented of a few significant contributions addressing this point, with a particular focus on the possibility of exclusion from trade and production “desertification” caused by a country’s low profitability of capital. A generalisation of a result obtained by Parrinello is provided.

Date: 2022
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Working Paper: Absolute Advantages and Capital Mobility in International Trade Theory (2019)
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DOI: 10.1080/09672567.2021.1967418

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