比较优势陷阱 英文Comparative Advantage Theory and Comparative Advantage Trap

The Comparative advantage &Comparative Advantage Trap about China and Countermeasures in Foreign Trade

15 国贸全英 傅文琦 2015333517006

Abstract

The theory of comparative advantage is the basis of international trade theory and participates in the international division of labor for all countries, and plays an active role in the development of international trade. Developing countries tend to be advantaged in the international division of labor and labor-intensive and resource-intensive Industry-oriented sectors, which is not conducive to the sustainable development of foreign trade in the long run, and may even fall into the trap of comparative advantage. Currently, China has not yet fallen into the trap of comparative advantage, and is changing from the extensive foreign trade growth mode to intensive growth mode .Under this circumstance，the driving force to achieve the trade power and gain the leading status in the international market is comprehensive innovation.

Key words：Comparativeadvantage，comparative advantage trap，China?s economy, competitive advantage

1. Comparative Advantage Theory and Comparative Advantage Trap

In the 18th and 19th centuries, from the classical economist Adam Smith's theory of absolute cost, David ricardo's theory of comparative cost, then Heck herschel - OLin's theory of factor endowments, finally through Leontief?s comprehensive extension, comparative advantage theory system is formed, which haslong been

regarded as the mainstream of international trade theory, becoming the guidance of foreign trade around the world.However, with the great impact of knowledge economy, the speeding-up process of economic globalization, the world trade environment has changed significantly, the defects of the comparative advantage theory have been exposed, thus the consequence is caused by the comparative advantage trap, which also shaked the countries especially developing countries who have worship the theory. 1.1 Comparative Advantage

Comparative advantage can be summarized as: between two countries, any product's production efficiency gap is not equal.Concentrate on outputting product with comparative advantage, importing products which has comparative disadvantage(that is, the \take the heavy phase right, two bad balance take its light\core part of this theory is: when countries participate in the world economy market, follow the principle ofcomparative advantage, promoting the establishment of the structure of comparative advantage in world trade.Developed countries use their capital and technological advantages, mainly produce and export products are capital and technology oriented. Developing countries with labor and resource advantage, product and export products on the basis of the labor and resources advantage, this way, each country can benefit from the world trade, and enhance national economic quantity. Moreover, starting from the mutual association of comparative advantage theory to inference, it is relatively mature. But we can?t deny that in the actual world

trade, comparative advantage theory is not completely fit to explain the situation, such as phenomenons like\paradox\a great number of developing countries follow it as a fatal policy, the implementation of comparative advantage and trade policies, in contrast to that, prompting the trade to a more serious and poverty situation , fall into the so-called comparative advantage trap.

1.2 Comparative Advantage Trap

\following the theory of comparative advantage, relying on the advantages of the labor, resources, mainly on production of primary products in foreign trade.When trading with powerful countries, although it is possible to get profit,but it is harmful in the long run ,the industrial structure will be unstable and unbalanced and will be long trapped in a passive position. That?s why we call it “trap”.

Here are two kinds of comparative advantage traps: the primary products comparative advantage trap and themanufactured goods comparative advantage trap. Primary products comparative advantage trap.It refers to the less developed countries has been implementing the strategy of comparative advantage, in order to find the location of the world division of labor, blindly follow the opportunity cost of which is light, simply rely on the advantage in the division of labor, resources to establish foreign trade, so only get very low primary value-added benefits.And, performing comparative advantage strategy for a long time will also continue to strengthen this effect.What?s worse, our world just need a rather constant amount of primary products, and the primary products production technology is gradually being

perfected, reducing the production cost thus commodity prices fall, deterioratethe world markets situation for developing countries . Inevitable poverty is not decreasing but increasing ,this situation is not surprising.

Manufactured products comparative advantage trap.Due to the severe primary products market situation, some developing countries began to look for new ways, with exports of manufactured goods to replace primary products, using advanced science and technology to promote industrial transformation. In order to improve the position in the world economy, prompting into high value-added camp ,developing countries have done a lot. Yetbecause of the limitations of their own technology, they can only rely on imitation, draw lessons from the world's advanced science and technology, or buy the mature technology of developed countries directly.To be honest, this is just a modified improvement of the comparative advantage strategy, second, in the process rely on foreign technology import too much, which will cause their own innovation ability be limited in the long runor even no achievement ,although entered in the high value-added camps ,but still under constraint thus can?t develop rapidly as it desired.

2

The Comparative Advantage Strategy Analysis of China

China ,nowadays the leading trade power in this world, having manipulated the comparative advantage strategy for decades,already having important influence on international trade, and have gained remarkable achievements.

2.1 The Improvement of Traditional Industrial Structure

After nearly 40 years of development, reform and opening up, the country's trade product structure have hadstepped out the shadow of the low efficiency, and transformed to be dominated by manufactured goods.Since the 1980 s, China's primary commodities in the foreign trade share have reduced year by year, and the share of manufactured goods have increased then,moreover manufactured goods of deep processing has replaced the main export primary commodities.It is good to seethat the unique advantages are emerging in our country, the structure of foreign trade products has been greatly optimized.

2.2 Big Economy Effect to the Rest of theWorld

China having participated in the world trade nearly 40 years,the volume of foreign trade is continuously growing to a enormous scale.The expansion in trade ofChina, have inestimable impact on the world economy, China's primary manufactured goods has become a necessity to Europe and the United States and other developed countries, besides,the price fluctuation of labor force , mineral resource is also have a shaking power in the world price domain.It is without doubt that China is a big economy entity and fatal part of the world business chain.

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