David Ricardo’s comparative advantage theory:

It states that nations ought to specialize in their production of those commodities in which they possess a relative advantage, even if they may not possess an absolute advantage in all commodities. This implies that they should work on what they can do relatively better compared to other commodities instead of seeking to be the most efficient in everything. This specialization results in trade and total global benefits.
Here is a clearer explanation:
Absolute Advantage:
This is when one country can make more of a commodity than another country using equal amounts of resources.
Comparative Advantage:
This is about the opportunity cost of making a good, which is the value of the best alternative that’s sacrificed. Even when a nation can make all goods more efficiently (absolute advantage), it’s still optimal to specialize in the good that it has the least opportunity cost of, i.e., it sacrifices less other goods to make that particular good.
Example
Suppose Country A can make cloth and wine with less resources than Country B (absolute advantage). Country A may be able to make cloth using much fewer resources compared to wine, but Country B may be comparatively more efficient in making wine. Then both nations are better off if Country A only produces cloth and Country B only produces wine, and they exchange these commodities.
Advantages of Specialization and Trade:
Specialization and trade according to comparative advantage result in more global production, reduced prices for consumers, and overall economic gain for all nations involved.
Most important takeaways from Ricardo’s theory:
Comparative advantage-based trade can make all participating nations better off, even though a single nation is generally more productive at producing all goods.
Nations ought to specialize in the products in which they possess a comparative advantage, even if they do have an inferiority in other production.
This specialization and exchange result in better allocation of resources and worldwide improvement in production.