5. The proposition that trade is beneficial is unqualified. That is, there is no requirement
that a country be "compe ive" or that the trade be "fair." In particular, we can show that three
cominonly held beliefs about trade are wrong. First, a country gains from trade even if it has
lower productivity than its trading partner in all industries. Second, trade is beneficial even if
foreign industries are compe ive only because of low wages. Third, trade is beneficial even if a
country's exports embody more labor than its imports.
6. Extending the one-factor, two-good model to a world of many commodities does not
alter these conclusions. The only difference is that it becomes necessary to focus directly on the
relative demand for labor to determine relative wages rather than to work via relative demand for
goods. Also, a many-commodity model can be used to illustrate the important point that
transportation costs can give rise to a situation in which some nontraded goods exist.
7. While some of the predictions of the Ricardian model are clearly unrealistic, its basic
prediction-that countries will tend to export goods in which they have relatively high
productivity-has been confirmed by a number of studies.