The Comparative Advantage Of Chinese Furniture Industry: An Economic Globalization Context

As the globalization degree of Chinese furniture industry rise gradually, as many more huge foreign furniture firms invest and set up factories in China, the resource and labor advantages the domestic companies owned will not exist. Therefore, the method of measuring RCA based on David Ricardo's comparative advantage and H-O theory has been not evaluating the real competitive level of the furniture industry in our country. The traditional methods such as RCA index reflect the fact too optimistically, that is why we need a new way to analyze the truth objectively.Firstly, we calculate the RCA indexes of the main furniture trade countries, by comparison, the paper shows China is located in the first place of the index charts, but the RCA index is no more than one, is slightly more than that of Italy. This indicates Chinese furniture industry has big space to improve in field of production and export, but on the other hand, this also tell us there are scale diseconomy and labor productivity deficiency in the Chinese furniture industry.Secondly, we calculate the 2003—2006 annual RCA indexes of domestic furniture industry, by comparison, we find that the indexes are all around 0.9, and decrease obviously in recent years. Through this, we should realize this kind of comparative advantage dependent on resources will not exist in the long run on the grounds that the marginal factor productivity shows a degressive trend.Thirdly, in order to explore what hinders the comparative advantage and the increase of comparative capacity in our country's furniture industry, the paper regards the RCA as the dependent variable to build an econometrics model, by means of this, we can find eight qualified independent variables which will be thought of as the corresponding input-output indexes of DEA analysis.Finally, by introducing the DEA method which is always been used to estimate the scale and technical efficiency of the decision making units, we can improve the traditional RCA assessment system, establish an improved RCA assessment system which will reflect comparative advantage and competitive advantage comprehensively. At the same time, we calculate the 2003—2006 improved RCA annual indexes of domestic furniture industry, by comparison, the paper offers us some corresponding policy suggestions.