What are the limitations of comparative advantage theory in the field of international service trade?

First, Ricardo believes that under the conditions of trade, two countries can implement a complete professional division of labor, one country completely produces cloth and the other country completely produces wine. But in the real world, to achieve fully specialized production, only under the condition of constant or decreasing opportunity cost can it be realized.

Second, Ricardo only analyzes trade from the supply side, which can benefit both sides. Portugal produces wine and supplies wine; Britain produces cloth and supplies cloth. However, in a market economy, supply and demand are like two halves of scissors, and both are indispensable. In the analysis of trade profit, it is necessary to combine supply and demand.

Thirdly, in Ricardo's comparative advantage theory, it is observed that a country as a whole is analyzed that trade can benefit both sides, but he did not further analyze the significant impact of trade on a country's income distribution and employment. In actual trade, some groups will profit and some groups' interests will be harmed.

Fourthly, Ricardo assumes that the only factor of production put into production is labor, so the comparative advantage of a country is only labor productivity. The difference between the output and labor productivity of the same product lies in the difference in technology. In fact, there are other factors that determine a country's comparative advantage. In this respect, limited by theory, Ricardo did not analyze it further. Modern western economists use modern economic methods to analyze international trade, which makes up for the deficiency of Ricardo's theory and further develops international trade in theory and analysis methods.

First, comparative advantage means that two countries produce two kinds of products, and the one with relatively high labor productivity ratio is their own comparative advantage.

Second, for example:

Suppose Portugal and Britain produce two kinds of products, cloth and wine respectively, and the resources invested are labor. To produce 1 unit of cloth, Portugal needs to invest 4 hours of labor, while Britain needs to invest 6 hours. Portugal has an absolute advantage in the production of cloth. Portugal needs 2 hours to produce 1 unit wine, while Britain needs 12 hours. Portugal also has an absolute advantage in producing wine. In other words, Portugal has an absolute advantage in the production of both products, while Britain is at a disadvantage. But Portugal can find the best of the two, which is its comparative advantage; Britain can find the second worst of the two, which is its comparative advantage.

First of all, from Portugal's point of view, in the production of cloth, Portugal's labor productivity is 1.5 times that of Britain. In terms of wine production, Portugal's labor productivity is six times that of Britain. 1.5 and 6 are the labor productivity ratios of two products in two countries. 6 is greater than 1.5, that is to say, in the production of cloth and wine, the ratio of labor productivity between Portugal and Britain is higher, so Portugal has a comparative advantage in the production of wine.

Secondly, from the British point of view, it takes six hours to produce 1 unit of cloth, while Portugal only needs four hours, and their labor productivity ratio is 2/3. In other words, the labor productivity of cloth production in Britain is only 2/3 of that in Portugal. In terms of wine production, it takes 1 2 hours to produce1unit wine in Britain, while Portugal only takes 2 hours, and the labor productivity ratio is 1/6. The labor productivity of wine production in Britain is 65438+ 0/6 of that in Portugal. 2/3 and 1/6 are the labor productivity ratios of two products in two countries. 2/3 is greater than 1/6, that is to say, in the production of cloth and wine, the ratio of labor productivity between Britain and Portugal is higher than that of wine, so Britain has a comparative advantage in the production of cloth.