Study On The Terms Of Trade And Its Influencing Factors

As a measure of trade interests and an important index of export competitiveness in international trade, the research on the terms of trade received more and more attention by domestic and foreign country. As a basis of a country’s foreign trade, trade structure’s changes and the development of a country’s economy are closely linked. This article attempts to combine these two aspects. First is about the explanation of the related theory about the terms of trade and trade structure. Second is about the summary of domestic and foreign literature review. Then we choose the two typical industry of chemicals and textiles of our country, using the qualitative and quantitative analysis, analyzing their foreign trade status quo. After that we study the historical change trend about the price terms of trade and income terms of trade of the two industries, according to the classification criteria of BEC. Next, we calculate5indexes, including Dispersion Index, Structural Change Index, Revealed Comparative Advantage Index, Import and Export of Technology Index, Import growth rate of world and make a descriptive analysis.In the empirical research, we use the data of import and export goods between2003-2012, according to the classification of HS. The data is divided into9classes, according to the international trade standard. Then we establish a panel data and analysis the correlation between Dispersion Index, Structural Change Index, Revealed Comparative Advantage Index, Import and Export of Technology Index, Import growth rate of world and income terms of trade. The study found that factors influencing the chemical income terms of trade include the Dispersion Index, Revealed Comparative Advantage Index, Import and Export of Technology Index. The factors influencing the textiles income terms of trade include the Structural Change Index, Revealed Comparative Advantage Index, Import and Export of Technology Index and Import growth rate of world and income terms of trade. At last, on the results of the model, we put forward some strategy and advice in improving our country’s chemical and textile trade condition and the trade structure.