In the context of free trade, what argument did Adam Smith provide to illustrate the benefits of specialization and comparative advantage? In the context of free trade, what argument did Adam Smith provide to illustrate the benefits of specialization and comparative advantage? Investing in domestic industries leads to higher profits Importing goods is always more cost-effective than producing them domestically Protecting local markets from foreign competition is essential for economic growth Specializing in goods where a country has a competitive advantage benefits all parties