Which economic theory advocates for specialization in trade?

The concept of comparative advantage is central to understanding trade in international economics. This theory posits that even if one nation is more efficient at producing all goods compared to another nation, both countries can still benefit from trade by specializing in the production of goods for which they have a relative efficiency advantage.

When countries specialize based on their comparative advantage, they can produce more efficiently and trade surplus production with others. This specialization allows for increased overall production and a more efficient allocation of resources, which leads to mutual benefits through trade. It emphasizes the idea that trade can lead to improved economic growth for all parties involved, fostering a greater interdependence between nations and facilitating global commerce.

Other economic theories, such as Keynesian economics, monetarism, and supply-side economics, focus on different aspects of economic behavior, such as government spending, money supply control, and tax policy, rather than specifically promoting specialization in trade. Thus, comparative advantage is the most relevant theory when discussing specialization within the context of international trade.