The National Income Of Foreign Trade Model

Based on the hypothesis that transnational factor mobility can't be occurring, traditional trade theorists discussed the international trade patterns and the benefits of the international trade. Obviously this assumption is no longer applicable in the economic globalization age that based on transnational factor flow today. As an evidence, there are abundant international trade based on production factors transnational flow and international cooperation. Transnational production factor mobility use foreign direct investment (FDI) that dominated by the multinational companies as the carrier. This paper define the import and export phenomenon and structure that based on foreign direct investment as foreign direct investment based trade pattern (FDI-based trade pattern). What is the formation mechanism of this trade pattern? How many gains had the host country have under this trade pattern? What is theoretically reasonable explanation? This dissertation will reply these questions for the topic of the national income of FDI-based trade pattern.Factor of transnational flow is the basis of forming FDI-based trade pattern.Once the transnational factor mobility are occurring,that must be change the traditional trade theory's assumptions, and will effect on trade patterns formed and trade benefits obtained.For the trade pattern formation,transnational factor mobility will change the source of production factor of commodity,it will not be limited in one country.For the gains from trade, transnational factor mobility will change the trade gains allocation,it will not be bounded by national borders.The impetus of transnational factord flow is the difference of factors price and income among countries,that depends on its scarcity under market economy.Different factor have different ability of liquidity and earnings.That form the basic pattern of international factor cooperation, constitutes the fundamental force of foreign trade pattern formation, determines the FDI-based trade pattern of trade gains or income.National gains of FDI-based trade pattern include direct national gains and indirect national gains.Direct national gains refers to the part of the value-added of production for export that host country gains.Indirect national gains refers to the positive impact of host country's national income.FDI-based trade pattern essentially rely on the global commodity chains under multinational companies control. FDI-based trade pattern based on transnational factor mobility has obvious structural features.These structural include export commodity structure, export industrial structure, the structure of the international division of labor and export region structure. As the enterprise main body of FDI-based trade pattern, the foreign capital enterprises decide its industry structure and export structure.The low rank of factors participating in international factor cooperation under FDI-based trade pattern determined the host country low-end in the international division of labor structure. Transaction cost such as transportation cost led to FDI-based trade pattern has obvious regional structure.FDI-based trade pattern structural features contradict with host country's comparative advantage and factor endowment structure. But it also impacts host country's economic structure, which constitutes the part of indirect national gains.Through analysing the income effect of factors inflow can see the direct national gains of FDI-based trade pattern more objectively and directly. The income effect of factors inflow will be defined positive-sum income effect, zero-sum income effect and difference income effect respectively. Positive-sum income effect refers to domestic income and foreign factor income all improved with FDI-based export trade expanding in dynamic.lt contribute to transnational factors cooperation and its revenue obtained.Zero-sum income effect means in the static production value of export of FDI-based trade pattern is given, host factor income and foreign factor income are reciprocal relationship.Difference income effect refers to, trade income measured by production value-added, differences between host country and foreign country, in both static and dynamic. Host country's national income is relatively low, foreign income is relatively high.The empirical results show that China's national income is relatively low in the FDI-based trade pattern.Further econometric analysis of foreign factor inflow impact on output, export and employment, shows the FDI-based trade pattern has positive influence to the national gains. In this paper, the basic conclusion is that China's direct national gains in FDI-based trade pattern relative to inflow factors'income is relatively low.But with the expansion of outputs and exports of FDI-based trade patterns,the national income from it was absolute increase.Further more,its impact on inderct national gains on the whole is positive.