Trade Power, Comparative Advantage And Factor Endowment

By the hypothesis of perfect competition and economies of scale, the traditional comparative advantage theory set up on the basis of Ricardo' s comparative advantage theory and Hecksche-Ohlin theory. However, new trade theory abandons some necessary hypothesis. New trade theory is different with traditional trade theory and makes traditional trade theory better at the same time. Moreover, it illustrates the source of comparative advantage. In general, the origination of comparative advantage comes from Factor Endowments, Specialization & Internal Scale Economics, Endogenetic Comparative Advantage and External Scale Economics.This dissertation focuses on the factor endowments, that is, physical capital, labor, human capital and others. From the analysis of physical capital, labor, human capital, this dissertation try to find out domestic economics how to influence comparative advantage and what is the critical factor for comparative advantage changes and formation of trade power. The influence of scale economics is also simply put out for more view on comparative advantage.This dissertation shows that the present trade competitive in China has no powerful domestic basement. It's useless to analyze the trade development from the point of a big trade country view. The quality of factor and arrangement of public institution mechanism are important. One hand, we would enhance per capita income;on the other hand, we would enhance the quality of factor and trade service condition, that is, institution efficiency.Meanwhile, we cannot analyze comparative advantage without consideration of its basis. We should focus on the domestic factor endowments and try to find out the critical factor. The domestic factor endowments include physical capital,labor, technology, human capital and scale economics in which physical capital and labor are two basic factors. In developing countries, capital deepening is a general phenomenon and technology has little effect on economics growth. How to accumulate physical capital efficiently is the first question. At the same time, shortage of use of capital in market seems conflict with capital deepening phenomenon. We would also pay attention to possible inflation resulted from capital deepening. This dissertation certifies that, Chinese growth from 80s mainly originates from the accumulation of quantity of capital and labor, not technology.After empirical and theoretical analysis, we can see labor surplus and dual economy is a general phenomenon in China. How to quicken the transfer of labor force to industry department and raise labor efficiency is a very important issue. The current "shortage of labor" shows that transfer of labor force is affected by price level, which indicates that raising labor salary is necessary. Considering dual economy structure, the most important issue is not transfer of trade way, but how to put the labor-intensive industry on efficient growth and strength its competitive advantage.The labor cost per unit is cheaper resulted from scale economy and technology than labor-intensive and current labor-intensive industry is not continuable. However, we should not scruple and hesitate to develop labor-intensive industry only for possible "comparative advantage trap", but try to analyze the current development stage of labor-intensive industry and make market mechanism more and more perfect so as to form the trade competitive advantage at last.This dissertation consists of following five chapters:Chapter 1 presents a general commentarial description of the existing research literature. Representative viewpoints in this regard are here generalized into four schools of thoughts. This chapter analyzes and introduces thecontributions of the four theories and their limitations, which constitute the starting point of the analysis in this dissertation.Chapter 2 offers a factor analysis system to discuss the relation between comparative advantage and trade power and the criterion of trade power.Chapter 3 and chapter 4 dwell on the source of comparative advantage, that is, domestic factor endowments, including capital, labor.Chapter 5 deals with other factors on the effect of comparative advantage.Chapter 6 sums up the dissertation.This dissertation is innovative in the following areas:1. Factor analysis system for trade competitive advantage;2. The influence of capital deepening on comparative advantage;3. According to Chinese situation, it analyzes the labor surplus in the Ranis-Fei model.