Study On The Relationship Between China's Trade Efficiency And Economic Growth:a View Of Division Of Labor

For more than30years of reform and opening up, China's annual economic growth at an average rate of9.8%, which is called the "China miracle" by Chinese and foreign observers, becomes one of the few cases in large countries in the history of mankind."China miracle" is by no means accidental and must fit a certain regularity and trend, then what makes the "China miracle"?Attention to these issues caused the thinking of Chinese and foreign scholars. That Institutional Evolution is one of the important driving forces to promote China's economic growth has become a basic consensus. The Evolution of Institutions reduces transaction costs, improves the trading efficiency, promotes the development of the division of labor, improves the productivity, and in turn drives China's rapid economic growth. Interpretation of the Chinese economy needs the understanding of the mechanism of interaction among the division of labor, transaction costs and economic growth, and the objective assess of the running costs of the Institutions-transaction costs.Since Adam Smith demonstrated systematically that the division of labor promoted the growth of wealth in his book "The Wealth of Nations"(1776), the role of division of labor in promoting economic growth has been less controversial in the academic community although the theory of labor division was rejected. The level of division of labor is often a measure of a country or region's productivity development level and the level of economic growth, so economic backwardness or stagnation can be attributed naturally to the lags of labor division level to a certain extent.Labor division means specializing in the production of some or certain kinds of products, and giving up the production of others. But the diverse needs of people require inevitably the exchange between different producers. Labor division is nothing but·"the result of people's power and propensity of exchange". The development of the division of labor depends on the exchange power's enhancement, which depends on the size of the transaction costs or transaction efficiency. The less the transaction costs, the easier it is. If transaction cost is too high, many potential deals will not happen.Along with the deepening of division of labor, trade becomes more and more frequently circuitous. The constant rise of transaction costs makes it necessary to propel institutional innovation in order to get the potential gains in trade.Based on reviewing and sorting out the theories of labor division, transaction costs and transaction efficiency and so on, this paper gets a clear understanding of the relationship between economic growth and division of labor, transaction cost and transaction efficiency. And on New Classical Economics'assumption of "the dilemma between the benefits of labor division and the costs of transaction", the efficiency of the transaction is brought into the framework of this analysis through the relationship between the total transaction costs and transaction efficiency, and is used to analyze the evolution of division of labor and the trends in changes of the transaction efficiency in China's economic growth and explain China's rapid economic growth in the System Transformation period. Firstly, the transaction efficiency of the trade industry in China is calculated by building the stochastic frontier production function model, and verifies that the transaction efficiency is helpful to promote economic growth by comparison of its size of different provinces and regions. Then, an empirical research is made by applying the weighted location quotient index of provincial and regional specialization level. The results show that the higher the level of division of labor in the region, the faster the economic growth is, which further confirms the proposition that the division of labor can promote economic growth. Combined with the conclusion of the above empirical analysis, this paper explains the changes in China's economic growth trend from the start of the system, transportation and communication, education and other factors that affect the efficiency of the transaction. Finally, it summarizes the basic conclusions of the study and put forward policy advice to further promote China's economic growth.