Absolute Advantages and Capital Mobility in International Trade Theory

CSWP 38 (November 2019)

Author Enrico Bellino and Saverio M. Fratini

Keywords capital mobility; absolute advantage; specialization.

JEL B51; D24; F21.

In this paper we will focus upon the role of absolute advantages in international specialization in connection with the phenomenon of capital mobility. We will provide a historical and analytical reconstruction of the main contributions, starting from the contrast between Smith’s and Ricardo’s standpoint on the issue. Two deep-rooted conclusions will be questioned by the analysis of this literature: (a) the unequivocal mutual benefits of opening up to international trade; and (b) the specialization of each country in the production of at least one good. With regard to this point, we will also provide a generalization of a result obtained by Parrinello (2010).

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