LIMITATIONS OF ABSOLUTE ADVANTAGE THEORYAbsence of absolute advantage: As according to the absolute advantage theory, one country has anabsolute advantage in producing one good while the other country has an absolute advantage inproducing another good. But, many developing countries are lacking behind in the area oftechnology therefore they are not able to compete in the global market in order to the production ofgoods, hence they are unable to benefit form the free trade market [Alf08]. More factors of production: In the real world, the production of goods are dependent of variousfactors, such as land, labour, capital and many other factors. Thus, the goods cannot be dividedaccording to their absolute advantage for a country in production basis. One country may requiremore of one input and simultaneously, less of another input than in another country. These otherfactors are analysed by the Hecksher- Ohlin model [Alf08]. Intra-versus Inter industry trade: According to the absolute advantage theory, there is an exchange ofone type of good with another type of good between two countries. But in today’s world manycountries do exchange similar types of goods also, such as cars etc. this type of trade is alsobecoming a trend in today’s world. It can be based on market power and economies of scale, asanalysed in new trade theory [Alf08].