Some Notes on Foreign Trade: Ricardo after Sraffa

Recent years have seen a reinterpretation of Ricardo's numerical example on foreign trade from Sraffa's note (1930), prompting economic historians and theorists to reconsider the scope of the example. This article seeks to clarify the revised interpretation and explain the common and distinct principles that govern the laws of comparative and absolute advantage. The condition of balanced trade in aggregated value is emphasized relative to the equations of normal prices based on this revisiting. Its special role is shown by the reformulation of Sraffa's price equations for two trading economies without international capital movements. It is proved that there is no additional degree of freedom for the choice of exogenous distributive variables if countries move from a state of autarky to one of free trade.