1.
Restrictive Model: Ricardo’s theory is based on only two
countries and only two commodities. But
international trace is among many countries with many commodities.
2.
Full Employment : The assumption of full
employment helps the theory to exaplin trade on the basis of comparative
advantage. The reality is far from full employment .
3.
Ignore Transport Cost: Another serious defect is that the transport costs
are not consider in
determining comparative cost differences.
4.
Static Theory:
The modern economy is dynamic and the comparative cost theory is
based on the assumption sand static theory it assumes fixed quantity of resources
if does not consider the effect of growth.