1. Name: AJEET KUMAR PANDEY
SB2
RICARDIAN THEORY
As we all know that David Ricardo was an English political economist and he develop
some facts which show that how a trade theory can be worked and develop or can
increase the productivity of global products. He explain that every country have its
own efficiency and supremacy in different field. As every country have factors of
production (Capital, Labor). A capital intensive countries are good in utilizing
capitalistic work like production and manufacturing and on the other hand those
countries who are good in labor intensive technique can use their labor in full
efficiency manner and economics itself defined that allocation of resources in such an
manner that consumer can maximize his/her satisfaction, producer can maximize his
profit and society can maximize his social welfare with a limited resources having
unlimited wants and choice.
For Example
Country Wheat Cloth
India 800 200
England 200 800
Total 1000 1000
In the above example we can see that there are two product wheat and cloth in which
India can use his factor of production more efficiently in producing wheat rather than
cloth because they are using labor intensive technique and on the other hand England

2. using capital intensive technique as a result they are good in producing cloths as
compare to wheat and by this we are assuming that they are producing good for the
global economics. And now on this situation David Ricardo suggest that if one is not
performing good in one field by using same amount of factor efficiency then they can
use it in their supremacy field like, if India is good in producing wheat then they have
to utilize all his effort in producing wheat and England have to use his all efficiency in
manufacturing cloth, and due to this they can produce 1600 wheat qty and 1600 cloth
qty as compare to 1000 of both. And you can see the result that previously both can
satisfy global economy by producing 1000 of wheat and cloth now using the theory
they can produce 1600 qty of both which can help them in decreasing cost and
poverty.
But it can be possible only if all countries create trust among them self. But there are
many limitation and loop hole in this.
Thanking you