... this work. I Liberalism Absolute gains According to "The Wealth of Nations" (1776) by Adam Smith, benefit from trade between two nations is based on the absolute advantage theory, which can be simply described in the following terms: country A has absolute advantage in producing one commodity over country B, which also has absolute advantage over country A in another different commodity, but both have absolute disadvantage with respect to the other nation in producing a second commodity. To maximise their interests, the two nations can gain by each specializing in the production of its absolute advantage and exchanging part of its output with the other nation for the commodity in which it has absolute disadvantage. They will discover that it is possible in this way for a mutually advantageous bargain to be struck (Jones 1988: 34-36). From the example mentioned, it may be noted that comparative advantage can be an advantageous experience ...

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