The theory of comparative cost answers this question. Now, Ricardo's assumptions by and large held good for his age. Later, in the course of the nineteenth century, conditions changed. Then came a reaction. Today capital and labor are again restricted in their mobility.
Reality again corresponds to the Ricardian assumptions.
However, the teachings of the classical theory of interregional trade are above any change in institutional conditions. They enable us to study the problems involved under any imaginable assumptions. Database Programming, Site Design and Hosting IWDC, Inc.