Join Friends of Pambazuka

Subscribe for Free!

Fahamu Bulletin Archive

About our Programmes

Donate to Pambazuka News!

Follow Us

delicious bookmarks facebook twitter

Pambazuka News

Latest titles from Pambazuka Press

African Sexualities

Earth Grab A Reader
Sylvia Tamale
A groundbreaking book, accessible but scholarly, by African activists. It uses research, life stories and artistic expression to examine dominant and deviant sexualities, and investigate the intersections between sex, power, masculinities and femininities
Buy now

Global NATO and the Catastrophic Failure in Libya

From Citizen to Refugee Horace Campbell
In this elegantly written and incisive account, scholar Horace Campbell investigates the political and economic crises of the early twenty-first century through the prism of NATO's intervention in Libya.
Buy now

Queer African Reader

Demystifying Aid Edited by Sokari Ekine, Hakima Abbas
A diverse collection of writing from across the continent exploring African LGBTI liberation: identity, tactics for activism, international solidarity, homophobia and global politics, religion and culture, and intersections with social justice movements. A richness of voices, a multiplicity of discourses, a quiverful of arguments. African queers writing for each other, theorising ourselves, making our ...more
Buy now

China and Angola

African Awakening A Marriage of Convenience?
Edited by Marcus Power, Ana Alves
This book focuses on the increased co-operation between Angola and China and shows that although relations with China might have bolstered regime stability and boosted the international standing of the Angolan government, China is not regarded as a long term strategic partner.
Buy now

How Europe Underdeveloped Africa

To Cook a ContinentWalter Rodney
Rodney shows how the imperial countries of Europe, and subsequently the US, bear major responsibility for impoverishing Africa. They have been joined in this exploitation by agents or unwitting accomplices both in the North and in Africa.
Buy now

Pambazuka News Broadcasts

Pambazuka broadcasts feature audio and video content with cutting edge commentary and debate from social justice movements across the continent.

See the list of episodes.


This site has been established by Fahamu to provide regular feedback to African civil society organisations on what is happening with the African Union.

Creative Commons License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 Unported License.

Comment & analysis

From comparative to competitive advantage

Chambi Chachage

2010-04-22, Issue 478

Bookmark and Share

Printer friendly version

cc S M
Economist David Ricardo's theory of 'comparative advantage', despite being highly dubious, continues to exert a high degree of influence on Tanzanian policymakers, writes Chambi Chachage.

The Nyerere Intellectual Festival Week has come to a close. It has proved to be what it promised to be, a moment of reflections on the Arusha Declaration in the time of a crisis of capitalism.

Just before our economists wrapped up the festival with deliberations on a discipline that has primarily been responsible for dragging Tanzania down the road to neoliberalism, an interesting exposé occurred. Utsa Patnaik exposed the fallacy of David Ricardo's theory of 'comparative advantage'. Ironically, this theory continues to influence economic planners and policymakers.

This author of 'The Republic of Hunger' indeed gave us food for thought. In her lecture on 'The agrarian question in the neoliberal era', she observes how this 'theoretical rationale is used to urge developing countries to "open up" their agriculture to free trade'. Yet we hardly question it.

Said she: 'This famous argument where Ricardo took the two countries as England and Portugal, and the two commodities as cloth and wine, said that even if the second country, Portugal could produce both goods more cheaply than the first country, as long as the relative cost of production was different – namely one country say Britain by producing one unit less of wine could produce more of cloth, than the other country Portugal could, then it would make economic sense for Britain to specialize in cloth and Portugal in wine.' But do they produce both? No!

In fact at the time when the theory was being developed in the wake of mercantile capitalism, it was Portugal that produced both goods. Britain produced cloth. But it could not produce wine commercially. Why? As Utsa reminds us, it is because it cannot grow grapes in Britain. No wonder, like many imperial countries of the time, it colonised countries with primary resources.

Tellingly, as Utsa observes, 'modern textbooks try to avoid the problem by altering Ricardo's own example from cloth and wine to cloth and food'. 'But', as she notes, 'altering the example per se does not do away with the fallacy in the argument, for it is a rule and not an exception that countries trade in goods they are incapable of producing.' Yes, why buy what you already have?

She thus affirms that 'developing countries are poor today precisely because they were and are much richer in primary resources than are developed countries which continue to depend to this day, more and more heavily for their food, beverages, fibres and energy on these developing countries.' In other words, we are poor because we are rich. They are rich because they are poor.

However, as she puts it, the theory keeps on insisting that for 'unchanged total output of one good, the output of the other good would increase through such specialization, and by trading both countries could then consume more of one good for no lower consumption of the other good – thus both countries would benefit.' We only have to turn to our Poverty and Human Development Reports (PHDRs) to observe this persistent influence that Utsa studied elsewhere.

PHDR 2007 confidently asserts that experience 'has proven that a sound choice of growth drivers is based on a comprehensive analysis of a country's comparative and competitive advantages'. It then categorically concludes that 'for most poor countries, including Tanzania, comparative advantages will, at least initially, determine the choice of appropriate drivers.'

This, it claims, 'is because competitive advantages – developed over time – depend on an advanced level of technical and managerial expertise, which is currently lacking in most sectors'. What more rationale do we need for recolonisation through foreign direct investments and free trade? No wonder a first 'comparative advantage' PHDR 2007 lists is agricultural land!

Probably because the ongoing global crisis of neoliberalism has stripped mainstream economics of its hegemonic garb of legitimacy, the recently launched PHDR 2009 is relatively less explicit. In its chapter on 'The role of the state in a developing market economy', it concludes that 'state ownership and implementation of specific activities will depend upon the comparative advantage of the state in relation to the other development actors' and not on 'direct ownership'.

Lest we think this has nothing to do with Ricardo's theory, let's be reminded that the other development actors mentioned in PHDR 2009 include 'small-scale producers' and 'private investors'. As we all know, now the latter are virtually synonymous to foreign investors who are increasingly displacing small-scale producers. As a matter of fact they are doing so in the areas of 'geographical' 'comparative advantages' listed in PHDR 2007 – land, mining and tourism.

It is not by accident then that our economists, who write these government reports which inform the National Strategy for Growth and Reduction of Poverty (MKUKUTA), talk that way. They have been brought up on the bosom of Ricardo. It is indeed 'most unfortunate that an incorrect theory has been taught for two centuries and continues to be taught uncritically to this day'.

This is why it is very important to take Utsa's critique of the influence of Ricardo's fallacious theory in policymaking very seriously. After all, it was another equally influential economist, John Maynard Keynes, who confessed that 'practical men who believe themselves to be quite exempt from any intellectual influences are usually the slaves of some defunct economist'.

Let us face the fact of life that we have been enslaved by the defunct economics of comparative advantage. That way we can free ourselves. For what we really have is a competitive advantage.


* Chambi Chachage is co-editor of 'Africa's Liberation: the Legacy of Nyerere', forthcoming from Pambazuka Press.
* Chambi Chachage's blog can be found at
* Please send comments to [email protected] or comment online at Pambazuka News.

Readers' Comments

Let your voice be heard. Comment on this article.

↑ back to top

ISSN 1753-6839 Pambazuka News English Edition

ISSN 1753-6847 Pambazuka News en Français

ISSN 1757-6504 Pambazuka News em Português

© 2009 Fahamu -