What considerations might restrict the extent on which the theory of comparative advantage is realistic?
Originally the theory of comparative advantage was advanced by the nineteenth century economist David Ricardo as an explanation for why nations trade with one another. The theory claims that economic well-being is enhanced if every country's citizens produce what they have a comparative advantage in producing relative to the citizens of other countries, & then trade products. Underlying the theory are the assumptions of free trade between nations and that the factors of production (land, buildings, technology, labour and capital) are relatively immobile. To the extent that these assumptions do not hold, the theory of comparative advantage will not realistically describe international trade.