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in a way in which we have some advantage." (quoted in Van den Bossche 2005, p.19)

Smith's succinctly reasoned argument about the imperative value of nations concentrating or specialising in their area of economic advantage and trading the gains of this advantage for what they need or are disadvantaged in, is one of the most important pillars used for the justification of free international trade. Simply put, instead of a nation becoming the proverbial jack of all trades and a master of none', it rather stands to gain if it becomes a master or a specialist of one or some trades instead of being an inefficient jack' of all.

Smith's theory of specialisation was further developed by David Ricardo in his theory
of comparative advantage. The theory explains that, if the UK for example, is better than Portugal in the production of cloth, then the UK has an absolute advantage over Portugal in cloth production. (Barnard 2004) Conversely, if Portugal is better than the UK at producing wine, then it has an absolute advantage over the UK in wine production. Where there is no trade between the UK and Portugal, both countries will have no option but to produce both cloth and wine resulting in the autarky situation. However if the UK and Portugal engage in trade, each can concentrate on their area of advantage the UK on cloth production and Portugal on wine production and buy from each other what they are disadvantaged in.

It is further argued that even in a situation where the UK has an absolute advantage in
both wine and cloth production, it will still make economic sense for the UK to specialise in one product because, though the UK may be better than Portugal in producing both products, it may be better in cloth production than in wine production. The UK must therefore concentrate on it strength cloth production. Portugal can then also specialise in wine production and trade it for cloth with the UK. In this situation "[A] country does not have to be best at anything to gain from trade. That is comparative advantage." (WTO Secretariat 1998, p.9)

Ricardo used just two nations in his formulation of the theory of comparative advantage. However in adapting this theory to justify international trade, the reasoning is that when trade is liberalised among nations, each nation will end up specialising in the economic area where it can perform in a higher level of relative efficiency as compared to other nations. (Dunoff 1999) As nations specialise globally, it results in global production

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