The Theory Of Comparative Advantage Of China's Foreign Trade Structure Conversion

First, this dissertation reviews the development of the Advantage Theory. The Advantage Theory evolves from Absolute Advantage Theory to Comparative Advantage Theory, Factor Endowment Theory and then to Dynamic Comparative Advantage Theory. This dissertation also attempts to discuss the methodologies of the research and application of the Advantage Theory. The traditional trade theory can be used to solve problems of the modern international trade. The Advantage Theory, especially its extended Dynamic Comparative Advantage Theory, is a useful analytic framework for the study of China's structural transformation of foreign trade.By analyzing the Revealed Comparative Advantage Index and the Trade Competitive Index of China's exporting commodities ranging from 1980 to 2004,this dissertation concludes that the resources-intensive industry used to have comparative advantage, but not anymore, the labor-intensive industry still have obvious comparative advantage and the capital-and-technology intensive industry does not have comparative advantage yet, but has great potentials.This dissertation also discusses some major problems of China's structural transformation of foreign trade. It focuses on the develop trends of the labor-intensive industry and the capital-intensive industry and it also gives some suggestions. Since the labor-intensive industry is important to China's economic development and can also help to solve the unemployment, it is necessary to continue to develop this industry. The capital-intensive industry does not have much international competitive power yet. We should choose to develop those which have potentials for competitive advantage, and give up protection for those which can hardly have competitive advantage in the future.