Advantage And Trade Interests

The question about interest in international trade is one of the main topic in the existed theory of international trade. The traditional theory of comparative advantage think that the comparative advantage comes from technology or factor endowment difference between countries, and the comparative advantage is sources of interest of international trade. The theory of economy of scale think that economy of scale is an important basic of contemporary international trade, and economy of scale is sources of infra-industry trade. The dynamic theory of comparative advantage study international trade from the degree of economic growth ,the change of technology and factor should induce the transfer of comparative advantage and interest of trade. The New-classic economic think that economy of division is sources of international trade. I think that all of the above are sources of international trade, we cannot only emphasis on a certain kind of them and out of sight others. Moreover, we should differentiate sources of competitive advantage between advanced country and developing country. The nature and sources of interest of trade are different between the early-developing countries (or advanced countries) and the later-developing countries. The early-developing countries can get monopolistic profits in international trade by technology advantage ahead of others .The later-developing countries cannot get these profits, but they can get gains from trade by backward advantage.The later-developing countries' competitive advantage (or backward advantage ) come from the lower cost of labor, and combined with flowing-in of foreign capital, technological learning and institutional learning. They can get interests from trade as thus:(1) direct interest of trade, which comes from exporting goods with lower costs and importing goods with higher costs;(2)improve employment;(3)motivate technological progress ,improve economic growth, improve economic structure, make division of labor depth, improve institution structure ,and access economic growth. But all these interests of trade are potential, a later-developing country can get interest or not, and the sizes of interests depend on some conditions on practice. The direct factors which affect interests of trade consists of the terms of trade, the sizes andstructure of trade; the institution and environment have large affections on interest of trade; but technology and technological progress have dependent affections on interest of trade. A later-developing country should maximize its long-term interest of trade.Since 1978,china has been keeping fast growth in economy and foreign trade together. That's to say, china have got many interests in trade by making use of backward advantage. Foreign trade has improved employment,technological progress,economic structure,access economic growth,and have improved the people's welfare. Now china has had large economic and technological gap compared with advanced countries , such as American and Japan, so china has large potential in making use of backward advantage.