Economic Development And Trade-regionalization

Economics is a science of explaining the world, pursuing more profound understandings and demonstrations of the economic life & social development. The key task of this essay is to demonstrate a new theoretical framework designed to interpret the general mechanism of economic development, with which an important group of economic phenomena is to be dealt. The aim of searching for the interpretation is to further illustrate and verify the mentioned mechanism and its appearances. This new framework is the New Classical Economics and hifra-marginal Analyses, and the "important economic phenomena" is the market expansion in the Economic development and the phenomenon of trade-regionalization, including the economic integration within the international economic area, the trade-regionalization & the problem of regional trade protectionism within China.The general mechanism of economic development is a fundamental question that economics, especially the economics of development, is required to answer. Following the development from the Classical Economics to the New Classical Economics, this essay attempts to critically review the development, research fruits & their cross & complementation, to search for the patterns of the economic development mechanism. This essay proposes that at least three questions are to be involved in the research on the general mechanism: first, what the origin of increasing wealth & increasing returns is; second, what the mechanism is which answers for the self-reproduction & self-realization of the increasing returns; and third, what the elements are which mobilize this mechanism and also restrict its evolutionary speed and direction. TheNeoclassical School deals with the first two questions with the concept of "Economy of scale" while evading the third one; whereas the new economics of institution provides an answer for the third one while relating little on the first two. The New Classical Economics surmounts, to a large degree, the above flaws, by incorporating the Smith-Young-Coase thoughts into one analytic framework, in which the division of labor and actions consist the basic configuration of the human economic society while the undulating trade-offs between the division of labor & transaction cost and their effective compromises rum through the whole social economic development.With this framework and its technological means, this essay first delves into the problem of regional trade protectionism within China with the infra-marginal analysis of the Ricardian Model where the transaction cost has been introduced. The analysis shows that the coexistence of multiple coordination mechanisms provides the basis for the phenomenon of regional trade protectionism, during the evolution of China's social economic web of the division of labor, from the central-plan coordination to the increasing local administrative coordination, and then to the market coordination, in which the developed area (industry) opts for an open trade policy, whereas the less developed area opts for regional trade protection policies, in accordance with the Nash Equilibrium in short-term decision. The central government, if it is to break the regional trade protectionism, should adopt correspondent measures serving to guide local governments to make long-term decisions from making short-term ones.Based on the primary ideas and means of the New Classical Economics, the essay proposes a framework for explaining the adverts of the trade-regionalization and the international economic integratioa The core idea is that the phenomenon of integration results from people's dealing with trade-offs which are constituted by the web of the division of labor & both the endogenous transaction cost On the one hand, people exploit the benefits of the expansion of the web as much as possible; on the other hand, they have to prevent the hazards led by the malfunction and even the break down of the web, and furthermore, to take into consideration of the effects of indogenuous transaction cost. The framework provides a stronge...