From Inter-Industry To Intra-Industry Trade: Evolution Mechanism Analysis And China's Empirical Study

The determination and the development of trade pattern is the most fundamental issue in international trade theories. The crux of this issue lies in a study of import and export products, its determinants and its direction of further development. At the end of the 1970s, the new trade theory began to emerge to explain the lot of two-way trade in the same industries within industrialized countries, which was different from the traditional interpretation of the trade theory of comparative advantage. Under the new trade theory, trade pattern is not only determined by comparative advantage on the basis of factor endowments or technical differences, the economies of scale in production and the imperfect competitive market structure also can be the determining factors of trade pattern. While it is precisely these factors led to a proliferation of intra-industry trade. These new trade theory's explanations bring hope to late-development countries to break the so-called "comparative advantage traps". However it is worth noting that the early research of the new trade theory was almost based on the experience of industrialized countries, and less related to the dynamic development of intra-industry trade in the developing countries, no to mention the in-depth study of big developing countries like China. For the reason above, this dissertation tries to bring the evolution of inter-industry and intra-industry trade into a dynamic analysis framework, and reveals the decisive role of economic development on the evolution of trade pattern and the specific evolution mechanism in the economic growth process in the theory. And on this basis, the dissertation makes an empirical test for the evolution of China's trade pattern and its specific evolution mechanism. Finally, the dissertation gives some policy recommendations.In theory, the dissertation analyzes macro factors and micro mechanisms of the trade pattern's evolution from inter-industry to intra-industry trade. The analysis of the macro economic factors indicates that the developing countries' trade pattern is associated with their economic development stages. The pattern of trade evolves with the structural changes of the leading industrials upgrading and the industrialization strategies conversion. In the analysis of the micro mechanisms, the dissertation modifies the new economic growth model and first proposes that capital accumulation and technology progress in the economic growth process is the endogenous variables and microeconomic foundation factors to decide the long-term growth of intra-industry trade in developing countries. And there are three main mechanisms for the promotion of intra-industry trade: capital accumulation, technology diffusion and technology innovation. Specifically, capital accumulation mechanism can be summarized as: capital accumulation→market expansion→intra-industry trade increase. The increase in capital stock can increase the type volume of diversity products and expand the supply market of products through increase investment and improve labor productivity on the one hand, and can expand the scale in the demand market through increased endowment structure similar to the developed countries on the other hand. As two different levels of technology progress, technology diffusion mechanism and innovation mechanism could be unified summarized as: technology progress→market upgrading→intra-industry trade increase. When the technology progress is the result of asymmetry international technology diffusion, imitation and learning together will lead to the extending of product scope and the upgrading of product quality. That is it can bring the upgrading of market and the increasing of intra-industry trade. When the technology progress is the result of domestic enterprises' technology innovation for maximum profits, these new products have a certain level of international leading technology. The competitive advantage of high-tech products can create, and the intra-industry trade with developed countries can increase.Empirically, the dissertation tests two aspects of evolution trend and mechanism. In the test of evolution trend, the dissertation first makes a longitudinal study to China's trade patterns evolution history since reform and opening up; then makes a co-integration analysis to test the relationship between the economic development and the trade pattern. It shows that China's trade patterns do exist a growing trend of the proportion of intra-industry trade and a downward trend of the proportion of inter-industry trade. China's level of economic development has a long-term stable relationship with the evolution of intra-industry trade, and the level of economic development has brought the increase of intra-industry trade in the proportion. In the test of evolution mechanism, the dissertation holds the factors of capital accumulation, technology diffusion and technological innovation as independent variables, and uses the industry level panel data to test the impact of capital investment and technological progress in the economic growth process to the increase of intra-industry trade. The result shows that the Chinese capital accumulation mechanism has a certain role for the long-term growth of intra-industry trade. This promote role is more appeared on the aspect of investment increase and market expansion, rather than on production efficiency promotion. Technology diffusion mechanism has very strong role in promoting China's long-term intra-industry trade growth. FDI and the import of advanced technology products have brought the growth of intra-industry trade. China's technology innovation mechanism has a certain role for the long-term growth of intra-industry trade, but it's the weakest mechanisms of the three.Based on the above analysis, the dissertation presents the corresponding policy and expects evolution mechanism of trade pattern to fully function, so as to promote China's foreign trade.