Comparative advantage

definition          The concept, formulated by British economist David Ricardo, according to which economic agents- people, firms, countries- are most efficient when they do the things that they are best at doing. Comparative advantage is particularly important in global markets, where countries benefit most by producing and exporting goods and services that they can produce more efficiently (at a lower cost, by using less physical, human, and natural capital) than other goods and services. In particular, Ricardo showed that a country can benefit from international trade even if it has higher costs of production for all traded goods and services relative to the countries it trades with- that is, even if it has no absolute advantages whatsoever. This can be done by correctly choosing the country's international specialization in accordance with its comparative advantages. In this case, by using export earnings to import other goods and service at prices that are lower than the costs of their domestic production, the country will maximize the overall volume of national production and consumption.

http://www.worldbank.org/depweb/beyond/global/glossary.html