Economic theory has offered different explanations for the causes and benefits of international trade. Among them, two fundamental approaches stand out: absolute advantage and comparative advantage. The research by José Mauricio Gómez Julián examines these theories not only at the conceptual level, but also in light of the outcomes observed following the adoption of trade agreements.

The aim of the study is to determine whether the outcomes resulting from the adoption of trade agreements between countries —especially when significant technological asymmetries exist between them— constitute evidence in favor of the theory of absolute advantage or of theories grounded in comparative advantage.

To carry out this comparison, the paper considers three dimensions: the mathematical generalizability of the theories, the historical context in which they were developed, and the available econometric evidence.

Absolute Advantage and Comparative Advantage

Absolute advantage, associated with the tradition of Adam Smith, explains trade on the basis of absolute differences in countries’ productive capacities. From this perspective, differences in productivity and costs between economies are directly relevant to understanding their trade relations.

Comparative advantage, developed from the work of David Ricardo and later extended by other theories of international trade, holds that exchange can generate benefits even when one country possesses absolute advantages over another, provided that relative differences allow for specialization.

The paper confronts these two approaches by asking which of them has greater capacity to explain the actual outcomes associated with trade agreements, particularly when the countries participating in them exhibit substantial differences in their technological capabilities.

Three Dimensions for Comparing the Theories

1. Mathematical Generalizability

The first dimension examined is the mathematical generalizability of the theories. The analysis considers the extent to which formulations corresponding to absolute advantage and comparative advantage retain a logical foundation when attempts are made to extend them beyond their particular formulations.

This comparison forms part of the criterion used by the study to determine the relative soundness of both theoretical traditions, together with the historical and econometric evidence.

2. Historical Context of Their Development

The second dimension is the historical context in which the theories of international trade were formulated. The paper does not consider theoretical constructions in isolation from the historical conditions in which they emerged, but instead incorporates that context as part of the assessment of their explanatory capacity.

In this way, the research relates the historical development of the different theories to the contemporary problem of explaining the outcomes of trade agreements between economies that may exhibit considerable technological differences.

3. Econometric Evidence

The third dimension concerns the econometric evidence. For this purpose, the study considers two types of models:

• Computable General Equilibrium (CGE) models, employed in the analysis of the expected effects of trade agreements.
• Objective Bayesian Generalized Linear Models, used to empirically examine the relationships present in the data.

The empirical component incorporates information from the UNITED STATES-COSTA RICA TRADE AND DEVELOPMENT INDICATORS (1991–2019) database, compiled by Gómez Julián in 2024, which brings together indicators concerning trade relations and development in the relationship between the United States and Costa Rica.

In the application of the objective Bayesian generalized linear models, relationships between one dependent variable and one independent variable are examined, with 14 dependent variables being analyzed. In this way, the contrast between the theories is not confined to abstract reasoning, but also incorporates empirical outcomes related to the observed effects of trade agreements.

The Central Result

The comparison of mathematical generalizability, historical context, and econometric evidence leads to a definite conclusion. According to the study, theories of international trade grounded in comparative advantage do not display a rigorous logical and empirical foundation, whereas the opposite result is found for the theory of absolute advantage.

The outcomes observed in contexts characterized by significant technological asymmetries therefore provide evidence favorable to absolute advantage over comparative advantage as an explanation of the trade relations analyzed.

The importance of technological differences between economies is therefore central to interpreting the outcomes of trade agreements. Treating those differences as secondary leads to conclusions different from those that emerge when the theories are confronted with the empirical results examined in the study.

What Does This Imply for Trade Agreements?

The paper’s conclusions extend to the way trade agreements should be analyzed. The results indicate that views regarding these agreements and the structures they adopt must take into account the technological and wage asymmetries existing between the parties.

These asymmetries are not a secondary element. On the contrary, they are fundamental to understanding the consequences that trade integration can have between economies with different productive capacities and to properly evaluating the outcomes obtained after the adoption of such agreements.

The study further concludes that trade agreements constitute a fundamental instrument capable of encouraging or discouraging countries’ growth and sustainable development. Their outcomes therefore cannot be assessed solely through theoretical assumptions about the general benefits of exchange, but must instead be confronted with the specific conditions and actual results of the economies involved.

A Comparison Between Theory and Outcomes

The paper’s central argument can be summarized as a confrontation between the predictions and foundations of international trade theories and the concrete outcomes associated with trade agreements.

By combining the analysis of mathematical generalizability, historical context, and econometric evidence, the research concludes that the explanation based on absolute advantage possesses stronger logical and empirical support than explanations grounded in comparative advantage within the problem under study.

Consequently, the analysis of trade agreements must pay particular attention to technological and wage differences between countries, since these differences are decisive for understanding the effects such agreements may produce on their trajectories of growth and development.