Adam Smith developed the theory of absolute advantage which states that countries should specialize in producing goods they can make at lower absolute cost than other countries. David Ricardo later proposed the theory of comparative advantage, showing that even if one country is more efficient in all goods, both countries can still benefit from trade by specializing in the goods they have a comparative rather than absolute advantage in producing. Comparative advantage exists when a country can produce a good at a lower opportunity cost than another country. Specialization according to comparative advantage increases total world output.