The Mechanisms And Measurement Of Gains From Trade

According to trade theories, gains from trade are the core reasons for a country to participate in international trade. With the deepening of Chinese reform and opening up, China’s trade has acquired fast development with its growth in trade volume and trade surplus. However, considering the rapid development of the trade scale, we have to pay attention to the gains from trade. Therefore, we need to analyze the mechanisms generating trade gains as well as the quantification of gains from trade.Generating mechanisms of trade gains are different from causes of trade in spite of their deep connection. For the quantification of gains from trade, there are several models which are different in terms of theoretical framework、premises and data. To quantify China’s gains from trade accurately, we have to therefore find the proper model.Based on the research of the causes of trade, this paper has concluded three generating mechanisms of trade gains for each of which includes one or more parts. The first mechanism is the mechanism of trade, with which gains are generated by exchange; the second mechanism is the mechanism of production, with which gains are brought by specialization、technology spillover competition effect and returns to scale led by trade; the last mechanism is mechanism of consumption, with which gains are brought by the reduction of price、the richness of product varieties. The three mechanisms are closely related to each other and cannot be divided.This paper chooses the model of welfare change to quantify the gains from trade for the period from1983to2011. The result of the quantification suggest that gains from trade has increased from121.6billion yuan in1983to122,566.3billion yuan in2011; for the29years being tested, the average gains from trade is21,807.7billion yuan. The analysis of the quantification result for welfare change and gains from trade suggest that with the fast development of the economic globalization and the trade liberalization, gains from trade has increased with trade volume; also, gains from trade can be affected and lowered by global economic crisis.