ricardian theory...of national
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Ricardian economics are the economic theories of David Ricardo, an English political economist born in 1772 who made a fortune as a stockbroker and loan broker.[1][2] At the age of 27, he read An Inquiry into the Nature and Causes of Wealth of Nations by Adam Smith and was energized by the theories of economics.
His main economic ideas are contained in On the Principles of Political Economy and Taxation (1817). This set out a series of theories which would later become theoretical underpinnings of both Marx's Das Kapital and Marshallian economics, including the theory of economic rent, the labour theory of value and above all the theory of comparative advantage.
Ricardo wrote his first economic article ten years after reading Adam Smith and ultimately, the "bullion controversy" gave him fame in the economic community for his theory on inflation in 19th-century England. This theory became known as monetarism, the theory that excess currency leads to inflation.[1] He also played a part in the emergence of classical economics,[3] which meant he fought for free trade[4] and free competition without government interference by enforcing laws or restrictions.[2]
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His main economic ideas are contained in On the Principles of Political Economy and Taxation (1817). This set out a series of theories which would later become theoretical underpinnings of both Marx's Das Kapital and Marshallian economics, including the theory of economic rent, the labour theory of value and above all the theory of comparative advantage.
Ricardo wrote his first economic article ten years after reading Adam Smith and ultimately, the "bullion controversy" gave him fame in the economic community for his theory on inflation in 19th-century England. This theory became known as monetarism, the theory that excess currency leads to inflation.[1] He also played a part in the emergence of classical economics,[3] which meant he fought for free trade[4] and free competition without government interference by enforcing laws or restrictions.[2]
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The Ricardian theory of trade focuses on the comparative advantage of the nation. According to the Ricardian theory of trade, comparative advantage determines the pattern of trade. Ricardo asserted that even if a nation does not possess an absolute advantage, there are changes of gains through trade among the nations by comparative advantage. The Ricardian theory is based on differences in technology across nations. A nation is said to have a comparative advantage is a good if it can produce relatively more efficiently or relatively less efficiency compared to other nation.
For example, there are two countries in the world India and China. Each can produce two goods say cricket bats and footballs. Perfect competition prevails in the market for each good and each country in endowed with 100 units of labor and China with 120 units of labor. Producing one cricket bat required 10 units of labor in India and 15 units of labor in China. While producing one football requires 20 units of labor in India and 60 units of labor in China possibilities.
For example, there are two countries in the world India and China. Each can produce two goods say cricket bats and footballs. Perfect competition prevails in the market for each good and each country in endowed with 100 units of labor and China with 120 units of labor. Producing one cricket bat required 10 units of labor in India and 15 units of labor in China. While producing one football requires 20 units of labor in India and 60 units of labor in China possibilities.
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