Answer to Question #57595 in Economics for steph

Question

In light of the Ricardian model, how might you evaluate the claim by developing countries that they are at a disadvantage in trade with powerful industrialized nations?

Answer 1

According to the Ricardian model of international trade countries should export such goods, in production of which they have a comparative advantage. Very often the developing countries have a comparative advantage in exporting raw materials or resources, because they have poorly developed industry, and industrialized developed countries produce using this raw materials and export finished goods, in production of which they have a comparative advantage. That's why developing countries may consider that they are at a disadvantage in trade with powerful industrialized nations.