Anti-gradient Evolution Strategy For China Participating In International Division Of Labor

Before the World War II, the international division of labor was dominated by the classical international trade theories. According to the theory of comparative advantage by David Ricardo and the theory of factor endowment by Heckscher, Ohlin and Samuelson, inter national trade should always occur between the countries that differ considerably in factor endowment. These theories not only explain the business activities between the northern and the southern countries, but also result in the presently international division of labor.However after World War II ,intra-industry trade occurred among industrialized countries which are similar in factor endowment, and they traded similar or even the same goods, the trade value has been second-three of world total trade value. In addition, facing the challenge of "Leontief Parodox", the classical international trade theories can not supply with satisfactory explanation. Lots of Economists, such as Krugman, Lancaster and Dixit, put forward new international trade theory-increasing return to scale under the condition of imperfect competition. The theory holds that in reality imperfect competition is the normal state while perfect competition is the abnormal state, relying on their own patents, manufacturers produce different products which could not be substituted for each other so that they become monopolistic competitors. In short term they can earn monopolistic profits resulted from patents and get increasing return to scale on basis of constantly innovating & creating. When production scale is expanding, the adequate human capital and large capacity of consumering market in developed countries secure the expanding, therefore, highly professional division of labor and cooperation lead to the result that trade amount inside one industry among the developed countries is far greater than that between the developed countries and the developing countries.Since constantly innovating and creating basing on highly professionaldivision of labor can create dynamically comparative advantages, the developing countries can also create this advantages by formal education and "learning by doing" to join the international division of labor. Krugman and others, realizing this point, hold that technology innovation in developing countries would hinder developed countries from getting monopolistic profits and weaken their competition. In addition, they advocate Strategic Trade Policy so as to obtain profits as much as possible.Employing transaction cost theory and analyzing the models of technology transmitting & technology innovating by Krugman, this paper draw a conclusion that the developing countries actually at their cost help the developed countries to make more rapid progress when receiving transmitted industries.Only when the developing are able to make innovation and creation by themselves, they can obtain the equal status in international trade and benefit the consumers all over the world. The anti-gradient evolution theory of China joining international division of labor holds that China reform at industry positioning, industry structure and industry organization, as well as institution so as to realize leaping over development.