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 resented 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.
Bellino, E., Fratini, S. M., Absolute advantages and capital mobility in international trade theory, <<EUROPEAN JOURNAL OF THE HISTORY OF ECONOMIC THOUGHT>>, 2022; 2022 (29-2): 271-293. [doi:10.1080/09672567.2021.1967418] [https://hdl.handle.net/10807/184004]
Absolute advantages and capital mobility in international trade theory
Bellino, Enrico
;
2022
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 resented 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.
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