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Absolute Advantage Theory
(18th century)
Absolute advantage theory is introduced by the Scottish economist Adam Smith (1723-1790).
Absolute advantage theory asserts that a nation benefits from manufacturing more output than others since it is in the possession of a particular resource or commodity. This particular resource can also be a certain method or knowledge that increases the production efficiency, and thus reduces the relative need to resources.
Also see: comparative advantage theory, comparative costs, Heckscher-Ohlin trade theory, technological gap theory
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