The Development Of Entrepreneurial Factor And The Dynamic Comparative Advantage Enhancement

Since the creation of Adam Smith's absolute advantage theory and David Ricardo'comparative advantage theory, the theory of comparative advantage has become the core of the international trade theory. In the past three decades after China's reform and opening up, the country made full use of its comparative advantage of the abundant labor resource to participate in the international division of labor, realizing a rapid economic growth. It can be seen as a successful application of the comparative advantage theory. However, with the deepening of economic globalization and the international division of labor in the industrial chain, transnational corporations from the developed countries have taken control of high-profit links in the global value chain with its dominance in technology, capital and marketing channels, etc. Although China has become the world's manufacturing center, it only receives the minor share of the value chain revenue because of the fact that it takes part in the international division of labor using the primary factor of the cheap labor. In order to change the "low-end lock-in" situation in the global value chain, China must continuously enhance its comparative advantages and to achieve the dynamic comparative advantage.Although "learning by doing" and innovation have been proved to be the two main sources of the dynamic comparative advantage, there are few studies on the mechanism of enhancing the dynamic comparative advantage by increasing the capability of "learning by doing" and innovation. Inspired by the standpoint of the new growth theory that the human capital plays a vital role in the technology progress, we believe that through persistent "learning by doing" and indigenous innovation, entrepreneurs would inflict a positive impact on the dynamic evolution and the obtaining of the comparative advantage. Therefore, the study on the relationship between the entrepreneurial factor and the technology progress is of great significance both theoretically and practically.First, we quantitatively measure the density and capability of the entrepreneurial factor in various regions of China. The positive correlation between the increase in the quality of the entrepreneurial factor and the enhancement of the "learning by doing" and the innovation capability is proved from both the theoretical and the empirical dimensions, promoting the dynamic evolution of the national comparative advantage. It is undeniable that the upgrading of the dynamic comparative advantage is based on a higher level of comparative profits. Therefore, we study the impact the density and the structure of the entrepreneurial factor could inflict on the gaining of the regional comparative profits. Finally, our study analyzes the institutional barriers blocking the "visualization" of the entrepreneurial factor and gives some advice to promote the development of entrepreneurial factor. The innovative points are as follows:1. We reveal the special importance of the entrepreneurial factor in the enhancement of China's dynamic comparative advantage in the transition period, expanding the connotation of the traditional comparative advantage e theory by giving a better explanation for the real-life problems and providing a beneficial solution to the changing of the disadvantageous status-quo and the increasing of the competitiveness of China's enterprises in the international market. According to the traditional comparative advantage theory, China's enterprises use only the cheap labor resource which is comparatively abundant to participate in the international division of labor. As a result, our country is "locked-in" at the lower end of the global value chain, receiving the minor share of the comparative profits. This theory, however, has ignored the differences between the market structures of various countries. As a developing country in the transition period, China needs to visualize its originally implicit entrepreneurial factor under proper market-oriented system settings so as to optimize the distribution of factors, to increase the efficiency of learning and innovation process in the economy and to obtain more comparative profits.2. Breaking the limits of the traditional human capital study, we include the factor of entrepreneur into the analytical frame of the economic growth, the technology progress and the regional gap in the comparative profits and the residents' well-being. Indexes reflecting the density and the capability of the entrepreneurial factor are constructed. Using an econometric model, we quantitively prove the correctness of the above theoretical hypothesis. By building an endogenous growth model of the entrepreneurial resource enhancing the "learning by doing" effect and innovation capability, we expand the analytical frame, stating that the entrepreneurial resource is the core for the promotion of technology progress and the realization of the evolution of the dynamic comparative advantage. In the empirical analysis, a method to quantatively evaluate the entrepreneurial factor is designed, replacing the use of the average years of schooling as an alternative variable for human capital. We further verify the positive correlation between the richer entrepreneurial resources and the better "learning by doing" effect and the higher innovation capability.3. We analyze the "bottleneck" constraints-the industrial entry barriers which limits the effect of "learning by doing" in the expansion of the China's entrepreneurial factor. In the open economy, the barriers actually block the path through which the Chinese entrepreneur might obtain the dynamic comparative advantage, becoming a serious obstable for the visualization and expansion of the entreprenerial factor. The industrial entry restrictions and the "crowding out" effect imflicted by the foreign-funded enterprises restrict the Chinese entrepreneurs in the manufacturing sectors of the export industries which exert weaker "learning by doing" effects. The R&D sectors of these industries are mainly located in the developed countries. The seperation of "doing" and "learning" would result in the isolation of the Chinese entrepreneurs from the most advanced technology, hence restricting the full play of the entrepreneurial factors and the enhancement of China's dynamic comparative advantage. In practice, the "visualization" barriers of the entrepreneurial factor may be removed in the the macro, meso and micro levels of the legal and economic systems, industrial entry regulations and the coorperation governance principles respectively, so as to promote the sustainable development of entrepreneurial factor.