Abstract

http://ssrn.com/abstract=2066303
 
 

References (10)



 
 

Footnotes (9)



 


 



Ricardo's Theory of Comparative Advantage: Old Idea, New Evidence


Arnaud Costinot


University of California, San Diego (UCSD) - Department of Economics

Dave Donaldson


Massachusetts Institute of Technology (MIT)

April 2012

CEPR Discussion Paper No. DP8930

Abstract:     
When asked to name one proposition in the social sciences that is both true and non-trivial, Paul Samuelson famously replied: `Ricardo's theory of comparative advantage'. Truth, however, in Samuelson's reply refers to the fact that Ricardo's theory of comparative advantage is mathematically correct, not that it is empirically valid. The goal of this paper is to assess the empirical performance of Ricardo's ideas. We use novel agricultural data that describe the productivity in 17 crops of 1.6 million parcels of land in 55 countries around the world. Crucially, this dataset contains information about the productivity of each parcel of land in all crops, not just those that are currently being grown. This direct information about relative productivity differences across economic activities allows us to compute, for the first time, the output predicted by Ricardo's theory of comparative advantage. Despite all of the real-world considerations from which this theory abstracts, we find that Ricardo's theory of comparative advantage has significant explanatory power in the data, at least within the scope of our analysis.

Number of Pages in PDF File: 11

Keywords: comparative advantage, Ricardian theory

JEL Classification: F10, F11

working papers series


Date posted: May 25, 2012  

Suggested Citation

Costinot, Arnaud and Donaldson, Dave, Ricardo's Theory of Comparative Advantage: Old Idea, New Evidence (April 2012). CEPR Discussion Paper No. DP8930. Available at SSRN: http://ssrn.com/abstract=2066303

Contact Information

Arnaud Costinot (Contact Author)
University of California, San Diego (UCSD) - Department of Economics ( email )
9500 Gilman Drive
La Jolla, CA 92093-0508
United States
Dave Donaldson
Massachusetts Institute of Technology (MIT) ( email )
77 Massachusetts Avenue
50 Memorial Drive
Cambridge, MA 02139-4307
United States
Feedback to SSRN


Paper statistics
Abstract Views: 227
Downloads: 2
References:  10
Footnotes:  9

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo4 in 0.500 seconds