Pakistan Institute of Development Economics


The Theory of Comparative Advantage in the Context of Underdevelopment and Growth

The theory of comparative advantage has two facets which should be clearly distinguished: 1) positive; and, 2) welfare. The former relates to the formulation of hypotheses to explain the pattern of trade; the latter concerns the advantages to be derived from the possibility of various forms of trade1. This paper examines the status of the welfare propositions of trade theory in relation to 1) some features of underdeveloped countries; and, 2) the phenomenon of growth.

Jagdish Bhagwati

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