The Principle (Theory) of Absolute advantage

The Principle (Theory) of Absolute advantage

This   theory   was   advanced    by Adam Smith.   It states   that   given   two   countries    producing    two commodities   using  similar  resources,  a country  should  specialize   in the production   of the commodity where  it can produce  more  units  at less costs  than the other  country.

Example

From the table above, Uganda has absolute advantages   in the production   of both commodities.    This is because  given  the  same  amount  of resources,   Uganda   is able  to produce  more  units  of cotton  and coffee  than Kenya.