The Dynamic Comparative Advantage Of China's Agriculture And The Evolution Of Its Trade Pattern

Considering that the contemporary dynamic comparative advantage theories do not actually offer clear and solid predictions on dynamics of international trade, the empirical study on dynamics of trade pattern is essentially important. The contemporary theoretical and empirical study is usually confined to manufacture industry, while agriculture is neglected. In case of an integrated and complete factor and commodity market, the dynamic comparative advantage is normally derived from endogenous technology progress, as is often the case with manufacture industry where dynamic trade pattern is no so much dictated by natural resources. Agriculture is highly resource-based, thus is not the topic of learning-by-ding theory and dynamic trade theory. That is why most studies mainly focus on manufacture industry.Yet, the integrated and complete factor and commodity market do not apply to developing countries. Due to the dualistic economic structure of developing countries, the dynamics of their agriculture and manufacture trade patterns might show some unique characteristics. Thus, the study on dynamics of international agricultural trade patterns is academically and practically important. The contemporary dynamic comparative advantage theory and related empirical studies focus so much on manufacture industry that they neglect the development of agriculture and the economic linkage between agriculture and manufacture industry, abstracting the dualistic economic structure of developing countries. This paper contends that dynamic comparative advantage theory also applies for agriculture, and that a general equilibrium framework should be adopted because the economic linkage between agriculture and manufacture industry, such as the connection between demand and supply side of the two industries and mobility of resources from one industry to the other, may influence dynamics of trade patterns.As a rapid developing economy, China and its agricultural trade pattern is most desirable for this type of study. The controversies over the dynamic characteristics of its agricultural trade pattern also necessitate more researches. The study on the dynamics of China's international agricultural trade pattern is of great practical significance to its strategic planning of agricultural trade, optimization of agricultural trade pattern and promotion of the international competitiveness of its agriculture.The paper is aimed to illustrate the dynamic characteristics of China's agricultural trade pattern, and to adopt a general equilibrium approach, i.e., to consider the effects of dualistic economic structure transformation so as to explain the evolution of the agricultural trade pattern On the basis of dynamic comparative advantage theory and economic development theory, the paper illustrates the dynamics of China's agricultural trade pattern, compared with that of developing countries such as Philippines, Brazil and developed countries such as the United States, Denmark, Netherlands and Japan. A comparison between the trade pattern dynamics of agriculture and manufacture industry is also made in the paper to demonstrate that the neoclassic economic and trade theory can explain the dynamics of China's agricultural trade pattern. As for methodology, the paper adopts visual statistics approaches, including nonparametric kernel density estimation, nonparametric conditional density estimation and scatter plots, to depict the dynamics characteristics of agricultural trade patternThe paper shows that most of the agricultural products has lost their comparative advantage during the period 1991～2006 and the overall extent of trade specialization is increasing. The present pattern makes sense in the view of adherence to the law of comparative advantage. Nevertheless, it is vulnerable to asymmetric economic shocks. The agricultural trade pattern of China is highly mobile, which indicates that the production structure and the trade specialization structure are under significant adjustment. Then the paper uses neoclassical economic and trade theory as well as empirics to explain the dynamics of China's agricultural trade pattern. The paper advocates that the decline of the comparative advantage of agricultural products results from the dualistic economic structure transformation and that an industrialization strategy with more emphasis on agricultural development should be enacted.