It is generally claimed that a movement from autarky to free trade con

It is generally claimed that a movement from autarky to free trade consistent with Ricardian comparative advantage increases the economic welfare of each of the trade partners.

However, it may be demonstrated that under certain circumstances, not everyone in each country is made better off. Illustrate such a case.

ANSWER

(a) If inter-generational, or economic growth considerations are taken into account, then a country may end up specializing in a good that has no or few growth linkages with the rest of the economy (e.g., an “enclave” sector).
(b) If some of the residents of a country have tastes biased toward their exportable, then they may suffer due to the trade-affected increase in the market price of the exportable good.