Most people who have taken an introductory economics course have encountered a deceptively simple idea: countries should specialise in what they do relatively best, even if another country is better at producing everything. This is the doctrine of comparative advantage, largely attributed to David Ricardo’s early-nineteenth-century work on trade between England and Portugal. It has become one of the most cited justifications for free trade and for the architecture of modern trade agreements.

A 2025 paper by Juan Manuel Gómez Julián, published in the Revista Cubana de Economía Internacional, asks a provocative question: does the actual data from trade agreements support comparative advantage — or does it point back to the older, simpler idea of absolute advantage? His answer, reached through a combination of historical analysis, mathematical reasoning, and modern econometric modelling, is likely to unsettle a good deal of conventional trade-policy thinking.

The Two Competing Ideas, in Plain Language

Before diving into the paper’s contribution, it helps to be absolutely clear about what is at stake. Imagine two countries:

• Country A can produce both wheat and steel more efficiently (faster, cheaper, with fewer resources) than Country B.
• Country B is less efficient at producing both goods.

Absolute advantage (Adam Smith, 1776) says: Country A is simply better at both. Country B has no obvious reason to compete head-to-head, and trade between them will be shaped by the sheer gap in productive capability.

Comparative advantage (David Ricardo, 1817) says: hold on — even though Country A is better at both, it is proportionally better at steel than at wheat. Country B, while worse at everything, is relatively less terrible at wheat. So if Country A focuses on steel and Country B focuses on wheat, and they trade, both end up better off. Absolute superiority does not matter; what matters is the ratio of efficiencies within each country.

This idea is elegant. It is also, as Gómez Julián argues, surprisingly fragile when tested against real-world data.

What the Paper Actually Does

Gómez Julián approaches the question from three complementary angles, which gives the paper unusual methodological breadth.

1. Mathematical Generalisation

First, he examines how well each theory holds up when you push it mathematically — that is, when you ask whether the logic remains sound under more general and realistic assumptions than the original two-country, two-good textbook models. Comparative advantage, he finds, depends on a narrow set of assumptions (identical technologies in certain respects, constant costs, no transport costs, full employment) that tend to collapse when the model is made more realistic. Absolute advantage, by contrast, remains coherent under a wider range of conditions.

2. Historical Context

Second, the paper traces the intellectual history. Ricardo developed comparative advantage in a world where the nature of production was fundamentally different from today’s globalised, technology-intensive economy. The author argues that the theory was a product of its time — useful as a thought experiment, but not a reliable guide for modern trade policy, especially when the technological gap between trading partners is vast.

3. Econometric Evidence

This is where the paper makes its most distinctive contribution. Gómez Julián uses two families of statistical models to test which theory better explains the actual outcomes of trade agreements:

• Computable General Equilibrium (CGE) models — large-scale simulation models that attempt to represent the entire economy, sector by sector, and then simulate what happens when a trade agreement changes tariffs, quotas, or market access. These are widely used by institutions like the World Bank and the WTO.
• Objective Bayesian Generalised Linear Models (GLMs) — a modern statistical approach that uses Bayesian inference (updating beliefs with data) with minimal subjective assumptions (“objective” priors). This allows the researcher to let the data speak more freely, without imposing strong preconceptions about what the answer “should” be.

The combined results point in the same direction: trade outcomes between countries with significant technological asymmetries are better explained by absolute advantage than by comparative advantage.

What Does This Mean in Practice?

The practical implications are significant, and they run against the grain of mainstream trade-policy advice for the past several decades.

If comparative advantage is the correct lens, then free trade between any two countries — rich or poor, technologically advanced or not — is mutually beneficial almost by definition. The policy prescription is straightforward: liberalise, sign agreements, reduce barriers.

But if absolute advantage is the better model, then the structure of the agreement matters enormously. A trade deal between a highly industrialised country and a predominantly agricultural one is not inherently win-win. It may lock the less-developed country into low-value-added exports while flooding its markets with manufactured goods that undercut local industry. The technological and wage asymmetries between the signatories become the central concern, not an afterthought.

In other words, Gómez Julián’s findings suggest that trade agreements should be designed with deliberate attention to the power imbalances and productive capacities of the parties involved — not simply signed on the assumption that any trade is good trade.

Why This Matters Beyond Economics

If you are a political scientist, a policy analyst, or simply someone who follows geopolitics, this debate is far from academic. Trade agreements are among the most consequential instruments of foreign policy and domestic economic strategy. They shape industrial policy, labour markets, migration patterns, and even geopolitical alliances.

The question of whether a trade deal is “fair” or “beneficial” depends on which economic theory you use to evaluate it. If the dominant theory is wrong — or at least incomplete — then decades of trade policy advice may have systematically underestimated the risks of liberalisation between unequal partners.

This does not mean protectionism is the answer. But it does mean that the terms of engagement matter. A trade agreement that accounts for technological gaps, includes provisions for technology transfer, and builds in adjustment mechanisms is a very different instrument from one that simply eliminates tariffs between unequal economies and calls it a day.