Research On The Theory Of Comparative Advantage Development Strategy

Many development economists in China, such as Lin Yifu and Cai Fang have been focusing on the development of China for a long time. They argued that the successful experience of industrialization in China in the last two decades can be largely explained by the adoption of the comparative advantage development strategy. They have also constructed an econometric model which shows that the industry/technology structure of an economy is endogenously determined by its factor endowments structure. This strategy gives full play to comparative resource advantages at each stage of economic development, thus sustaining economic growth and upgrading the resource structure. It proved that the development strategy is detrimental to long term industrialization and economic growth.But this hypothesis has been challenged seriously nowadays. People worry that China may fall in "Low Level Equilibrium Trap", which means that China may fail to improve its industry/technology structure if China keep the adoption of the comparative advantage development strategy. So this paper will try to reconstruct a new frame of the old theory and argue that a reward structure of a country is endogenous and history dependent, which may affect the realization of dynamic comparative advantage. Based on above work, the author will provide some reasonable suggestions for policy makers.The first part is the theory of comparative advantage theory of development strategies based on the framework, validation, comprehensive analysis and Commentary. Among them, the first chapter will have comparative advantage of the development of strategic theory overview, review the course of domestic development of strategic theory of the basic principles on the development of strategic theory of comparative advantage, also described the effect of its policies and theoretical validation; second chapter will highlight the comparative advantages implementation issues, the issue of development strategies and economic practice in policy design; Chapter III Review of the explanatory power of comparative advantage strategy.The second part will focus on the rational analysis of the academic community questioned the development of strategic theory of comparative advantage based on real economic phenomenon, and trying to find out the defects of the original part of the theoretical system. In this section, the fourth chapter of the real economic phenomenon, especially in China’s economic structure and industrial structure, the level of development lags behind reality narrative proposed to find the play hinder the original theory of power mechanism "; Chapter by comparative studies, one of the assumptions of the original theory into question, in Chapter Ⅵ to further clarify this assumption-"motivation" of entrepreneurial behavior and research sectors of the economy "need to fix the reason.The third part of this article, Chapter Ⅶ, this part of the undertaking on the part of the work done, to draw on the compensation structure hypothesis, from the perspective of the amendment of the original theoretical assumptions, the development of a more logical self-consistency of comparative advantage framework of strategic theory. Pointed out that due to the historical form of the economic development of China’s gradual reform the remuneration structure of the Chinese entrepreneurs face endogenous, this compensation structure is the impact of dynamic comparative advantage mechanisms play the role of reason.The fourth part of the main conclusions of this paper, policy advice and research prospects. Fixes and improvements on the original theory, this paper proposes to speed up the process of political reform to adapt to the needs of long-term sustainable growth; objective understanding of the inadequacies of this article lies in the lack of empirical analysis and institutional economics preparation of the theory can be further improved.The main contribution of this paper is:Amendments to the original assumptions of the theory, to identify the impact of dynamic comparative advantage mechanisms play-1, the assumptions on entrepreneurial behavior: the entrepreneur is always action under the constraints of profit maximization, In the fierce market competition, entrepreneurs will take the innovation technology and innovative production of sexual behavior; entrepreneurs are always action in the social reward structure constraints, entrepreneurs choose to configure the behavior or configuration economy based on the relative return differences the whereabouts of the remaining-into productive activities, can also flow to non-productive activities; dynamic comparative advantage to achieve the premise that the social reward structure reflects the production of the real economy: in the case of these other conditions are the same the relative rewards of innovation sex, or the entrepreneurs, expected relative return is higher than other activities; social reward structure from the historical form of the social economic development in the long term students to decide and choose the model of progressive reform after transition, often will give birth to non-productive activities is relatively higher pay compensation structure, the pay structure also has a history of dependence, easy to make the transition into a low-level equilibrium trap.The innovation lies in this article:one, seize the implementation mechanism of the core issues:the dynamic comparative advantage of developing countries to achieve economic transformation. The implementation mechanism of the dynamic comparative advantage is a simple conclusion in the original theory (or an implicit assumption), but this article is based on the interpretation of the real economic world, its implementation mechanism in-depth discussion, so that the comparative advantage of the logic of the development of strategic theory of the self-consistent enhancements; rebuild the motives of the entrepreneurs, the assumption of profit maximization is introduced into the theoretical framework of the hypothesis that endogenous capacity combining reconstruct the microscopic basis of the comparative advantage of the development of strategic theory. Rebuild the microscopic foundation of not only closer to the actual situation, and can further explain the dynamic comparative advantage mechanisms were based on the entrepreneurial behavior motivation;, to borrow Marx to expand the research methods of the theory of reproduction to identify the traditional comparative advantage this assumption, implicit in the strategic theory analysis of the real economy and analysis of economic growth and structural convergence of extending the scope to all the acts of entrepreneurs. This innovation makes the development of strategic theory of comparative advantage to be able to more fully explain the phenomenon of a country’s economic development, and make the right policy design based on the theory; learn from the Acemoglu endogenous reward structure model based on extended out a general theoretical framework to explain entrepreneurial behavior is how to configure and endogenous compensation structure and the impact of entrepreneurial behavior is incorporated into the overall framework of the comparative advantage of the development of strategic theory.