[China Glass Network] International trade theory is an important part of international economics. It is microeconomics under open conditions. International trade theory mainly studies the exchange of goods and services among countries, and studies the causes and results of international commodity exchange. And related policies. The scope of international trade theory also includes the international flow of production factors and the international transfer of technical knowledge. Production factors and technical knowledge have their own international market as a special commodity, and on the other hand, they play an important role in the production of goods and services. International trade theory also studies the interaction between economic growth, technological change and trade, and analyzes the causes and consequences of changes in international trade.
From the perspective of economics history, the theory of international trade can be traced back to the mercantilist theory of the late fifteenth century and the beginning of the sixteenth century. In Smith and Ricardo's trade theory, labor is the production factor, production technology is a given exogenous variable, and the scale of production returns. Smith and Ricardo's trade theory is part of the classical economic theory system and is called the "classical trade theory." At the beginning of the twentieth century, Swedish economists Heckscher and Olin proposed the trade theory of “resource allocation” or “resource endowment”. In the model of Heckscher and Olin, labor is no longer an input, but the scale of production remains unchanged. Their theory is called "new classical trade theory."
In the late 1970s, with the rapid development of international trade and structural changes, the theory of international trade in the Heckscher-Ohlin system was active again, and some economists began to use new methods. Studying the causes and consequences of trade, studying new trade structures and trade policies, and creating a series of new doctrines. After more than a decade of development, these doctrines have gradually matured. Some of them have been incorporated into textbooks, and others are still under discussion. They are still the frontier topics of trade. This article will briefly introduce the new developments of these trade theories and explain their significance to China's trade policy.
I. Economies of scale, imperfect competition, trade between industrialized countries and the same industry. The main explanation for trade reasons is the “scale economic trade theory” developed from the late 1970s. The main contributors are American economist Paul Krugman. This theory explains the trade between industrial countries and the same industry after the war, based on the economies of scale in production and the imperfect competition in the world market.
The development of the theory of scale economic trade [(1)a] is based on two different assumptions from previous theories: (1) the production of enterprises has economies of scale; and (2) the competition in the international market is incomplete.
Specifically, under the conditions of “economies of scale” and “monopoly competition”, the long-term average cost of enterprises decreases with the increase of production. The enterprises are faced with the market demand curve, and the market demand will increase with the decline of prices. Before participating in international trade, companies are only facing domestic demand. Due to the limited demand in the domestic market, companies cannot produce too much, so production costs and product prices have to be kept at a high level.
If companies participate in international trade, the market facing products will expand, and domestic demand plus foreign demand will increase production. As production is in the stage of economies of scale, the increase in production reduces the average cost of the product, thereby increasing competitiveness in the international market.
Due to the diversity of industrial products, it is impossible for any country to include all the products of an industry, thus making international division of labor and trade inevitable. However, there is no fixed model for which country to concentrate on which products to produce, either natural (competition) or agreement. However, the "two-way trade" of industrial products between developed countries is based on economies of scale rather than the comparative advantages of different technologies or different resource allocations.
II. International Trade, Technology Spillovers, and Economic Growth Since the late 1980s and early 1990s, the study of international trade theory has mainly focused on the relationship between international trade and technological progress and economic growth. In the economics literature, although there are many theories that explain the role of technology in trade and economic growth, a newer series of studies use technology as an endogenous variable, not only to discuss the impact of technology on trade, but also to analyze The role of international trade and economic growth in technological progress. Combining technological change, imperfect competition, economies of scale and economic growth is a relatively new development and frontier topic of international trade theory.