Brexit and the potential losses to the UK’s (and Ireland’s) ‘Comparative Advantage’.

Dr. Sylvia de Mars and Prof. Aoife O’Donoghue argue that Brexit would change the basis on which the UK trades regionally and globally and that it would also impact negatively on how Ireland would position itself.

One of the primary reasons cited in support of a Brexit is that it would enable the UK to conclude its own trade agreements, and consequently, to trade ‘more freely’ than it can currently do.

At present, its current trade agreements are negotiated by the EU as a whole, and Eurosceptics believe this process to be intolerably slow and contrary to UK interests.

They believe, in other words, that trade is absolutely necessary – but that the UK is better off pursuing free trade alone.

A key theory underpinning global desires for trade that is as ‘free’ as possible is 18th century political economist David Ricardo’s concept of ‘comparative advantage’.

It suggests that every country should focus on producing/providing what they are best at producing, and trade that product or service for other products or services.

Even where a country is not ‘the absolute best’ at anything, comparative advantage says that countries should specialise in those industries where they have a clear chance at outperforming other countries.

Comparative advantage is not an unchallenged theory—but it is the basis for all global and regional customs and free trade areas.

At present, Ireland and Northern Ireland have slightly differing comparative advantages…

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