The Dynamic Advantage And Economic Growth

Comparative advantage is the core of international trade theory and the most important theory basis for a country's foreign trade. Since the Prebisch-Singer hypothesis has been proposed, however, comparative advantage theory attracts more and more criticism for emphasizing static trade benefit and ignoring dynamic trade benefit, thus becomes a hot debate in theory. The truth of terms of trade declining and trade benefit losing threaten comparative advantage theory. Economic growth is the promises of social and economic development and the eternal topic of economic theory development. The emergence of dynamic comparative advantage theory not only smoothes this debate but also links the comparative advantage and economic growth theory. Because the essential of comparative advantage theory's evolution is the result of factor accumulation, the factor of human capital accumulation and technology progress are emphasized by endogenous economic growth theory.This paper firstly joints the dynamic comparative advantage theory and endogenous economic growth theory, and then gives literature review of dynamic comparative advantage in two clues, endogenous and exogenous. Secondly, this paper explains the general mechanism of dynamic comparative advantage promoting economic growth from the aspects of physical and human capital accumulation, technology progress and institution change. After that, it gives a empirical evidence from growth angle to prove the validity of the dynamic comparative advantage. Finally, considering the present situation of China, the author proposes some policy advice for China's economic development under the instruction of the dynamic comparative advantage theory and makes the theory sublimed.As to the innovation of this paper, the empirical part should be emphasized. It uses physical capital per labor and human capital per labor (physical capital abundance and human capital abundance) to manifest the result of factor accumulation and dynamic changes in different stages and gives a regression analysis considering GDP/Labor ratio as the sub- variable. Time period division is based on some important points of institution changes, thus indirectly, the institution factor is introduced into to the model as exogenous variable.