According to David Ricardo, international trade is beneficial even if one country is more efficient at producing all goods than another. This theory is based on the principle of comparative advantage, not absolute advantage. Here's a breakdown:

• Comparative Advantage: A country has a comparative advantage in producing a good if it can produce that good at a lower opportunity cost than another country. Opportunity cost refers to what a country must forgo in terms of other goods to produce a particular good.
• Benefits of Trade: Even if a country can produce everything more efficiently (absolute advantage), it still benefits from specializing in the production of goods where its comparative advantage is greatest and importing goods where its comparative advantage is least.
• Example: Imagine England can produce both cloth and wine more efficiently than Portugal. However, England might be relatively better at producing cloth, while Portugal is relatively better at producing wine. In this case, both countries benefit if England specializes in cloth production and Portugal specializes in wine production, and they trade with each other.

In essence, Ricardo's theory suggests that countries should specialize in producing and exporting goods and services they can produce at a lower relative cost (comparative advantage) and import goods and services that other countries can produce at a lower relative cost. This leads to increased overall production and consumption for all participating countries.

More information can be found at:

• University of Oxford - Trade Theory: New and Old
• Investopedia - Comparative Advantage