What Factors Affect the Growth of International Trade?

International Economics and Trade Major This major cultivates an open international perspective and broad subject background, outstanding innovation consciousness, pioneering spirit and practical ability, and is capable of operating, managing, consulting services, import and export trade and foreign trade enterprises and government departments. Comprehensive high-quality specialized personnel for network marketing and other tasks. Professional core courses: Microeconomics, Macroeconomics, Econometrics, International Economics, International Trade Practice, Introduction to Electronic Commerce, International Economic Cooperation, China's Foreign Economy and Trade, Business Communication English; Full English Teaching Courses: Business Communication English, International Correspondence in Economics and Business, Selected Readings in Business English; Bilingual Teaching Courses: Introduction to Information Systems, International Marketing; Simulation Operations Training Courses: International Trade Practices; Research Courses: Topics in International Trade; Discussion Courses: Topics in World Economics and WTO.

International trade and economy

International Trade and Economy (Economics)

To put it plainly, two requirements. The first is that the foreign language requirements must meet the requirements of a fairly proficient spoken language. Second, the practice of international trade,

Preferably big

International trade has arisen and developed under certain historical conditions. Social productivity and

International trade has developed rapidly after World War II. But at different stages, the pace of development of international trade is not consistent. The development of post-war international trade can be roughly divided into three major stages:

(1) Stage of rapid development of international trade (before 1973)

During the 23 years from 1950 to 1973, international trade increased from US $ 60 billion to US $ 574 billion, an increase of 8.5 times, with an average annual growth rate of 10.3%. This growth rate exceeded the level of the fastest growth period in the history of international trade. The rapid development of the post-war world economy is the basic reason for the rapid growth of international trade.

(2) Slow development of international trade (after 1973-1900)

After 1973, the growth rate of international trade slowed down significantly. This was mainly due to the high

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Western Economists' International Division of Labor and International Trade Theory

Classical international trade theory

(1) Smith's absolute cost theory:

Smith believes that the cause of international trade lies in the absolute difference in the cost of goods due to different geographical and natural conditions. He advocates division of labor, and believes that division of labor can increase labor productivity. It is in everyone's interest that each person specializes in the production of an item and then exchanges it. He believes that international division of labor is the highest form of various divisions of labor. Therefore, if the products produced abroad are cheaper than the products produced domestically (the production cost is absolutely low), then the products produced in the country under favorable production conditions should be exported in exchange for foreign products instead of producing them by themselves. He believes that the international division of labor is based on favorable natural endowments or favorable production conditions. Whether it is natural endowment or acquired favorable production conditions, a country can produce a product with absolutely low production cost and then exchange it. It will make the most efficient use of the resources, labor and capital of each country, thereby greatly improving labor productivity. Increase social material wealth.

Smith's theory of international division of labor is called regional division of labor or absolute cost theory.

(2) Ricardo's comparative cost theory:

Ricardo developed Smith's theory, raised it to a new level and proposed the theory of comparative cost. The core of Ricardo's comparative cost theory is the principle of comparative advantage. This principle tells us that any country, whether its economic strength is strong or weak, can determine its own comparative advantage products, arrange production and trade according to the principle of comparative advantage, so that both parties can use the same labor. Consume and get more products than you could get before the division of labor. Ricardo's comparative cost theory is regarded as a classic of western international trade theory. Subsequent international trade theories were supplemented or developed on the basis of Ricardo's comparative cost theory.

Modern international trade theory

(1) Factor Endowment Theory:

It was first proposed by Swedish economist Heckscher in 1918, and another Swedish economist Olin Yu

The theory founded in 1933 is also called the Heckscher-Ohlin theory or the He-Russian model.

Ricardo's comparative cost theory does not explain why comparative costs differ between the two countries. He-Russia inherited and developed Ricardo's comparative cost theory and proposed the factor endowment theory, explaining the causes of international trade with the abundance and absence of production factors.

The so-called production factors refer to the main factors that must be possessed in production activities, or the main means (land, labor, capital, entrepreneurial talent) that must be invested or used in production. Olin believes that the absolute international difference in commodity prices is the direct cause of international trade. The so-called international absolute difference in commodity prices means that the prices of the same kind of goods in different countries are converted into prices expressed in the same currency in different countries. International trade occurs because of differences in prices. When the price difference between the two countries is greater than the various transportation costs, the export of goods from a country with a lower price to a country with a higher price can bring benefits, and international trade can occur.

Why do prices differ between the two countries? Olin believes that the absolute difference in prices is due to the absolute difference in costs, and the absolute difference in costs is mainly due to:

First, the supply of factors of production is different, that is, the factor endowments of the two countries are different;

Second, different products use different proportions of factors in the production process.

According to this, a country's exports should be those intensive use of the country's most abundant factors of production in imports, and imports should be those intensive use of the country's most lacking factors of production in production. Depending on the type of production factor that is invested in the product and accounts for the largest proportion, the product can range from labor-intensive products, capital-intensive products, and technology-intensive products.

(2) "The Mystery of Leontief"

After the war, American economist Ontif used the input-output analysis method he created to verify the structure of American imports and exports based on the He-Russian trade theory, but the result was completely contrary to the He-Russian theory. The conclusion has caused a sensation in the West and is known as "Lyontief's Paradox."

According to Hess-Russia theory, the United States should export capital-intensive products and import labor-intensive products. But the actual verification result is exactly the opposite. The goods exported by the United States are labor-intensive products and the imports are capital-intensive products. Who is wrong? It seems that neither is wrong. This became a puzzle. In order to unravel this "mystery", Western economists have conducted extensive research on this and put forward various explanations, which have promoted the development of post-war international trade theory.

(3) Explanation of "The Mystery of Lyontief"

Leontief's own explanation. The endowment of production factors in countries varies not only in quantity, but also in quality. The reason for the "mystery" is that Ken City, because American workers are more efficient than other countries, is about three times more efficient than other countries. The main reasons for this are the high level of management of American companies in the major cities, the better education and training of workers, and the more aggressive people.

Human skills theory. Based on the heterogeneity of labor, it is believed that the production and trade of primary products mainly depend on the endowment of natural resources, while the production and trade of industrial products mainly depend on the endowment of skilled labor and human skills. Different countries have different levels of labor proficiency or skill, which determines their different positions in the production and satisfaction of industrial products. This is mainly because the international competitiveness of industrial products is determined by the quality and price of the products, which is closely related to the input of skilled labor. However, the proficiency of labor and the level of human skills have increased with the slow increase of the level of economic development and education, and it requires a long-term process. This makes countries with relatively abundant skilled labor in the production and trade of industrial products. To be in a leading position for a long time.

Human capital theory. The theory holds that skilled labor or human skills are also a type of capital, called human capital. Skilled labor is the result of investing, educating, and nurturing talent. It can repeat the same benefits as physical capital.

New Developments in Contemporary International Trade Theory

The endowment theory holds that the greater the difference in factor endowments among countries, the more opportunities for trade occur, and the greater the volume of trade. Therefore, the exchange of industrial manufactured products with the primary products of developing countries should be a major part of international trade. But this is actually not the case. Post-war exports from developed countries accounted for about three-quarters of world trade, and three-quarters of them were exports to developed countries. More than half of international trade is carried out in the form of trade in industrial products between developed and developed countries, while trade in developed countries and developing or households with better primary products of industrial products only accounts for less than the world trade. 1/5. This endowment theory cannot be explained. As a result, some economists had to come up with some new international trade theories in an attempt to theoretically explain this new phenomenon after the war.

(1) Demand similarity theory

This theory analyzes the flow of international trade from the perspective of demand. Particular emphasis is placed on the role of domestic demand. The more similar the demand structure of the two countries, the greater the volume of trade between the two countries. But what factors affect a country's demand structure? The theory holds that the level of per capita income is the most important factor affecting the structure of a country's demand. It can be said that the range of trade between countries with the same level of per capita income may be the largest, and the difference in per capita income level is a potential obstacle to trade. Use this theory to explain why the post-war trade between developed countries accounted for the largest proportion of international trade.

(2) Product life cycle theory

The production of products also has to go through three stages: new products, mature products, and standard products. First of all, the country that develops new products has advanced technology and high income levels. It begins to produce and export the product and heads for the international market. The gap in technological innovation is the reason for trade.

At the maturity stage, the spread of production technology, the continuous expansion of market demand, the sharp increase in output and sales, and the need to invest a lot of capital. At the same time, many countries are producing and exporting products, forming a situation of mutual export. At this time, the capital-intensive production technology gap became the cause of trade.

In the standard product stage, the product has become a general product without requiring a lot of capital and technology, and has become a labor-intensive product. At this time, developing countries have more comparative advantages, and the wage gap of unskilled labor has become the cause of trade. Product life cycle theory emphasizes the important role of technology in the international division of labor and treats technology as an important factor of production.

(3) Theory of intra-industry trade

Refers to the simultaneous output and input of a product in the same industrial sector in more than two countries. This occupies a large proportion in contemporary international trade and holds an important position. The main points of the theory:

Product differences form the basis of international trade

Differentiated products can be divided into two categories, one is a vertical product, and the other is a horizontal product.

The scale and price of trade in differentiated products depend on both supply and demand factors. The factors that determine demand are consumers' income levels and preferences. Among them, differences in income levels cause changes in demand for vertical products, and differences in preferences cause changes in demand for horizontal products. The factors that determine supply are manufacturers' economies of scale and monopoly profits.

Trade in the same product is caused by differences in costs such as transportation, storage, sales, and packaging.

The intra-industry trade theory is a new theory of international trade that appeared in the 1970s. It explains the reasons and scale of trade between the industry sectors in the same industry.