Chapter 3 — Further Reading

On the original idea of comparative advantage

David Ricardo, On the Principles of Political Economy and Taxation, 1817 (Chapter 7: "On Foreign Trade") The original. Chapter 7 contains the first formal statement of comparative advantage, with Ricardo's famous example of England and Portugal trading cloth and wine. The prose is 19th-century dense but the chapter is short and the logic is clearer than most modern textbook treatments. Available in many free online editions; read at minimum the first ten pages of Chapter 7.

Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, 1776 (Book I, Chapters 1–3) The pin factory example is in Chapter 1, the discussion of the division of labor is in Chapters 1–2, and the elementary logic of trade is in Chapter 3. The book is foundational and surprisingly readable. Free online.

On modern presentations of comparative advantage

Paul Krugman, "Ricardo's Difficult Idea," Journal of Economic Issues, 1996 (also available on Krugman's MIT page) Krugman, the 2008 Nobel laureate for his work on trade and economic geography, wrote this essay in part because so many smart non-economists fail to grasp comparative advantage. He explains why the idea is genuinely hard to internalize, where the typical confusions come from, and why it matters that you get it right. Highly recommended.

Krugman, Pop Internationalism, MIT Press, 1996 A book-length argument against the most common confusions about international trade in popular discourse. Krugman uses comparative advantage to dismantle a series of arguments that look plausible but are wrong. Some of his targets are dated (the book is from the early 1990s), but the analytical moves are timeless.

Russ Roberts, The Choice: A Fable of Free Trade and Protectionism, Pearson, 2007 A short fictional dialogue between the spirit of David Ricardo and a contemporary American manufacturer. The fable format makes the argument unusually accessible, and Roberts is honest about both the strengths and the limits of the comparative-advantage case for free trade.

On the modern global supply chain

Pietra Rivoli, The Travels of a T-Shirt in the Global Economy, John Wiley & Sons, 2005 A book-length tracing of the global supply chain for a single T-shirt, from cotton fields in Texas to spinning mills in China to assembly in Bangladesh to retail in the U.S. Rivoli is an economist who is honest about both the gains from trade and the human costs. One of the best things written for a general audience about how globalization actually works.

Marc Levinson, The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger, Princeton University Press, 2006 The story of how the standardized shipping container transformed global trade in the 1960s and 1970s. The book is partly history, partly economics, and entirely fascinating — and it gives a concrete sense of how a technology can dramatically lower the costs of trade and thereby unlock comparative-advantage gains that previously were not worth capturing.

Tim Harford, "The Surprising Truth About How We Got Rich," various essays and the BBC podcast 50 Things That Made the Modern Economy Harford has done an entire BBC series tracing 50 specific innovations that built the modern global economy. Many of them — the shipping container, the bar code, the gramophone — are stories about how reducing transaction costs made comparative advantage payable on a larger scale.

On the limits of comparative advantage

Dani Rodrik, The Globalization Paradox, W. W. Norton, 2011 Rodrik argues that the case for free trade is weaker than its proponents say (because of distributional and political costs) and stronger than its critics say (because the gains are real). The book is a careful middle-ground statement. Rodrik writes with the seriousness of someone who has worked on trade issues for a career and has changed his own mind about some of them.

David Autor, David Dorn, and Gordon Hanson, "The China Shock: Learning from Labor Market Adjustment to Large Changes in Trade," Annual Review of Economics, 2016 The empirical paper that documented the labor-market damage caused by the rapid expansion of trade with China in the 2000s. This is the most cited paper on the limits of comparative advantage in the real world. The methodology is technical but the introduction and conclusion are accessible to a beginner. We will revisit this paper in Chapter 9.

David Autor, David Dorn, Gordon Hanson, and Kaveh Majlesi, "Importing Political Polarization? The Electoral Consequences of Rising Trade Exposure," American Economic Review, 2020 A follow-up that traced political consequences of the trade shock. The paper finds that areas more exposed to Chinese import competition shifted toward more polarized politics. Worth reading as a reminder that trade has consequences beyond the economic ones.

Branko Milanovic, Global Inequality, Harvard University Press, 2016 Milanovic, a former World Bank chief economist, looks at how global trade has affected income distribution worldwide. His "elephant chart" — showing income growth from 1988 to 2008 for different parts of the global income distribution — is one of the most cited charts in trade discussions of the last decade. The book is a model of using data to evaluate sweeping claims about globalization.

On the coffee supply chain (case study 2)

Mark Pendergrast, Uncommon Grounds: The History of Coffee and How It Transformed Our World, Basic Books, 1999 (revised 2010) A comprehensive history of coffee from its origins to the modern day, including the supply chain dynamics, the labor conditions, and the politics. Long but readable.

Daniele Giovannucci and Stefano Ponte, "Standards as a New Form of Social Contract? Sustainability Initiatives in the Coffee Industry," Food Policy, 2005 An academic paper on the rise of fair-trade and other certification systems in coffee. Useful for understanding why certification programs are designed the way they are and what they accomplish.

Anthony Wild, Coffee: A Dark History, W. W. Norton, 2005 Less academic than Pendergrast but more readable. The "dark history" framing emphasizes the labor conditions and colonial legacies of coffee production.

Modern textbook treatments

Paul Krugman, Maurice Obstfeld, and Marc Melitz, International Economics: Theory and Policy, Pearson, multiple editions The standard graduate-level textbook on international economics. Chapter 3 (in most editions) is the formal treatment of Ricardian comparative advantage. The book is mathematical but the early chapters are accessible to undergraduates who have taken principles.

Robert Feenstra and Alan Taylor, International Economics, Worth Publishers, multiple editions A more accessible competitor to Krugman-Obstfeld-Melitz. Feenstra and Taylor cover comparative advantage with care and include more empirical case studies.

Popular and journalistic

The Economist, "Free Exchange" column (ongoing) The Economist's economics column regularly addresses trade questions. The magazine's general orientation is pro-free-trade, but the column is usually careful about the empirical record and willing to flag the distributional costs.

Planet Money, NPR, "The T-Shirt Project" Planet Money produced a multi-episode series tracing the supply chain for a T-shirt they had made. The series is a great companion to Pietra Rivoli's book and is a model of how to make supply-chain economics accessible to a general audience. Free online.

A reading order recommendation

If you have time for one of the books above, read Rivoli's The Travels of a T-Shirt. It is the most complete and most concrete picture of how a global supply chain actually works.

If you want the formal logic at its clearest, read Krugman's "Ricardo's Difficult Idea" essay — it's free, it's short, and it's by someone who understands both the math and why the math matters.

If you want to see the empirical limits of free trade, read the Autor-Dorn-Hanson "China Shock" paper, especially the introduction and conclusion. It is the single most important empirical paper on trade in the last twenty years.

Chapter 4 — How to Read Economic Data — is next.