Dynamic Research Of New-New Trade Theory’s Development In The Context Of Globalization

Nowadays, globalization has been stepped into every corner of the world economy systems, no country in the world can develop without catering to the trend of economy globalization. With the acceleration of the economic globalization process in the1990s, one of the most significant features of the global economy is that multinational companies spread their trade and investment activities widely throughout the world. At the same time, new trade phenomenon appears. For example, international trade and foreign direct investment has become the fastest economy growth activities, oversee subsidiary’s sales expansion of multinational corporations is much larger than that of its direct export, and international trade and foreign direct investment in service industries are developing faster than previous years. New economic activities as intermediate inputs trade, intra-firm trade, international trade vertical specialization and international fragmentation also appear. The forefront New-New Trade Theory first takes the heterogeneous firms as its research objects, it uses firm-level data to analyze economic activities and explain new trade phenomenon of multinational corporations. This thesis takes this as the cutting point and displays the dynamic development of New-New trade theory in the context of globalization. The whole thesis can be broken into four parts; the first part is introduction, the second part is about literature reviews, the third part is the body which introduces the background of New-New trade theory, analyze the Melitz model and enterprise endogenous boundary model. The Melitz model mainly indicates that firms choose different corporate strategies through their difference in productivity, the smallest or least productive firms in industry are forced to exit, intermediated productive firms only serve domestic firms while the most productive firms export. The enterprise endogenous boundary model mainly explains how enterprises choose their strategy to enter the international market, integration or outsourcing. After these, the thesis in turn studies other models of heterogeneous firms trade theory, it includes introducing the new research development of New-New Trade Theory in recent years, analyzing the expansion of heterogeneous firms trade models, and concluding the characteristics of New-New Trade Theory. The fourth part of the thesis demonstrates New-New Trade policy implications, and the revelation of New-New Trade Theory to China’s foreign trade based on its reality. It concludes the whole thesis in the end.