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Entrepreneurship and Comparative Advantage

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  • Carmen Elena Dorobat
  • Mihai-Vladimir Topan

Abstract

This article advances a blueprint for understanding the function entrepreneurs perform in international trade, by drawing on the connection between comparative advantage and entrepreneurial judgement. The mutual benefits of specialisation and exchange are demonstrated whenever we find a minimum relative difference between the productivity of resources; however, we argue in this article that the concrete pattern of specialisation—manifest in exchanges between individuals, firms or states—cannot be discovered from outside the market. Rather, comparative advantage has an irreducible entrepreneurial component, and international specialisation is an entrepreneurially driven phenomenon. We explain this by unearthing the connection between entrepreneurship (understood as judgement of the allocation of resources under uncertainty), the heterogeneity of capital and comparative advantage.

Suggested Citation

  • Carmen Elena Dorobat & Mihai-Vladimir Topan, 2015. "Entrepreneurship and Comparative Advantage," Journal of Entrepreneurship and Innovation in Emerging Economies, Entrepreneurship Development Institute of India, vol. 24(1), pages 1-16, March.
    • Handle: RePEc:sae:jouent:v:24:y:2015:i:1:p:1-16
    DOI: 10.1177/0971355714560036
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    References listed on IDEAS

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