The Study Of International Trade Benefits Under The FDI Inflows

The goods of traditional trade theory is made by the domestic factors, therefore the traditional trade theory postulates a country’s trade volume and balance of trade as a source of a country’s trade interests. However, with the development of Foreign Direct Investment, a country’s goods in trade are not only made by domestic production factors, but also by the foreign respectively advantaged production factors. Between2001and2012, Foreign Direct Investment Enterprises (FDIE) as an organization form and carrier of domestic production factors and foreign production factors, brought the volume of imports account for54.679%of the total proportion, exports account for54.662%, generating the trade surplus to$85.626billion a year, account for53.43%of total proportion on trade balance in China. Do the rising trade from foreign enterprises and expanding trade surplus mean China gains from trade promotion? How much gains of trade belongs to China? Based on this, this paper will be study on the gains from international trade under the FDI.Under the background of economic globalization, the essence of a country gains from trade is earning from production factors which is participating in the export activities, and relative earning from the production factor is determined by its relative international scarcity. Based on the production factors international mobility, the paper explained the export mechanism of FDIE and their impacts on import and export to host countries, analyzed the form of international trade under the production factors international mobility, points out the new characteristic of international division of labor, and illustrates the limitations of measuring a gains of trade by the trade volume and balance of trade under the production factors international mobility.Therefore, this paper introduced the definition of value added of export as an indicator of gains of trade. To analyze the reason of why a country’s value added of export is relatively high or low, this paper analysis the impact of different input production factor on the a country’s value added of export form three aspects which are nation, industry and product, found advanced production factors mainly on R&D and management is the key reason causing for the different value added of export.In order to judge the gains of trade better, this paper focused on the level of factor’s ownership, examine the Chinese gains of trade in the Export Value Added of Foreign-funded Enterprises (EVAFE), this paper follows the conception of industrial value added defined by National Bureau of Statistics of China, then divides the EVAFE into four parts included with Fixed Asset Depreciation, Net taxes on production, Workers Compensation and Operating Surplus. Data calculations found that EVAFE accounted for14.13%of export volume of foreign-funded enterprises, and workers compensation, net taxes on production accounted for only4.44%and0.59%of EVAFE between2003and2011.This paper argued that the causes of the above empirical results is that the essence of the value added of a country’s export is national earnings of production factors which is participating in enterprises the export activities. Therefore this paper further constructed the theoretical model, this paper analyzed that the impact of the export growth on the earnings of related production factors with inflowing FDI, and draws the corresponding proposition, pointing out that the relative scarcity of production factors is a decisive reason of relative earnings of production factors. In circumstance of factor cooperation in the world,the country which has scarce production factor yield relatively more gains of trade in the enterprises export, and vice versa. To empirical testing of a theoretical model, this paper uses Time series structure model and the Panel model for investigating the FDIE exporting influence on the earning of relevant production factors, finding that earnings of low-level factor inputs represented by labor in foreign-owned enterprises is relatively small, otherwise earnings of advanced factor inputs represented by sales channel and management is obtaining the higher income. Final, this paper pointed out that China’s gains of trade is relatively low.