David Ricardo’s Principle of Comparative Cost Advantage inspires International Trade

According to the theory of comparative advantage, each country would recognize these facts and stop attempting to make more luxurious locally for engaging in trade. David Ricardo developed the classical theory of comparative advantage in 1817 to clarify why countries engage in international trade. Ricardo presents, basically seeks to describe how and why countries gain by trading. The Ricardian model shows that an industry in a developed country could compete against a drive in a less-developed country (LDC) even though the LDC industry pays its employees much lower wages. Comparative advantage recommends that countries will trade with one another, exporting the goods they have a relative advantage in