What Is The Uncommon Sense In Comparative Advantage?

Say that the United States has higher output per worker than the rest of the world in making both computers and grain. But suppose the United States is relatively more efficient in computers than it is in grain. For example, it might be 50 percent more productive in computers and 10 percent more productive ingrain. In this case, it would benefit the United States to export that good in which it is relatively more efficient and import that good in which it is relatively less efficient.

Or consider a poor country like Mali. How could impoverish Mali, whose workers use handlooms and have productivity that is only a fraction of that of industrialized countries, hope to export any of its textiles? Surprisingly, according to the principle of comparative advantage, Mali can benefit by exporting the goods in which it is relatively more efficient and importing those goods which it produces relatively less efficiently.

The principle of comparative advantage holds that each country will benefit if it specializes in the production and export of those goods that it can produce a relatively low cost. Conversely, each country will benefit if it imports those goods, which it produces at relatively high cost.