What is the basis of international trade? Generally commonly used trade policy?

International trade theory is an important part of international economics, microeconomics under open conditions, international trade theory mainly studies the exchange of goods and services between countries, the causes and results of international commodity exchange, as well as related policies. The research scope of international trade theory also includes the international flow of factors of production and the international transfer of technological knowledge. On the one hand, factors of production and technological 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 as factor inputs. 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 a dynamic point of view.

From the history of economic doctrine, international trade theory can be traced back to the mercantilist doctrine of the late fifteenth and early sixteenth centuries. In Smith and Ricardo's theory of trade, labor is the only factor of production, production technology is a given exogenous variable, and returns to scale of production are constant. Smith's and Ricardo's trade theory is part of the theoretical system of classical economics, known as "classical trade theory". At the beginning of the twentieth century, the Swedish economists Heckscher and Olin put forward the trade theory of "resource allocation" or "resource endowment". In Heckscher and Olin's model, labor was no longer the only input, but the returns to scale of production remained constant. Their theory became known as "neoclassical trade theory".

Toward the late 1970s, with the rapid development of international trade and structural changes, the theory of international trade in the Heckscher-Russell system wandering for many years and active, a part of the economists began to use a new approach to study the causes and consequences of trade, the study of the new trade structure and trade policy, the creation of a series of new doctrines. After more than a decade of development, these doctrines have gradually matured. Some of them have been compiled into textbooks, and the other part is still continuing to be discussed, is still the cutting-edge thesis of trade, this paper will briefly introduce the new development of these trade theories and explain its significance to China's trade policy.

I. Economies of scale, imperfect competition, trade between industrially developed countries and the same industry

The main reason for trade to put forward new explanations from the end of the seventies developed "economies of scale of trade theory", the main contributor is the American economist Paul Krugman (Paul Krugman). Krugman). This theory explains the trade between industrial countries and between the same industries, which grew rapidly in the post-war period, on the basis of economies of scale in corporate production and imperfect competition in the world market.

The development of the trade theory of economies of scale [(1)a] is based on two assumptions that differ from previous theories: (1) that there are economies of scale in the production of firms; and (2) that competition in international markets is imperfect.

Specifically, under the conditions of "economies of scale" and "monopolistic competition", the firm's long-run average cost declines as output increases, and the firm faces a market demand curve in which the quantity demanded increases as prices fall. Before participating in international trade, firms faced only domestic demand. Due to limited domestic market demand, firms could not produce much, thus production costs and product prices had to be kept high.

If an enterprise participates in international trade, the market facing the product expands, and with domestic demand coupled with foreign demand, the enterprise's production can increase. Since production is at the stage of economies of scale, the increase in production instead leads to a reduction in the average cost of the product, thus increasing competitiveness in the international market.

Because of the diversity of industrial products, it is impossible for any one country to encompass all the products of an industry, thus making the international division of labor and trade inevitable. But which country to concentrate on which product, there is no fixed pattern, either naturally (competition), can also agree to the division of labor. But this "two-way trade" in industrial products between developed countries is based on economies of scale, rather than comparative advantage arising from differences in technology or resource allocation.

Two, international trade, technological spillovers, and economic growth

Since the late eighties and early nineties, the study of international trade theory is mainly centered on the relationship between international trade and technological progress, economic growth. In the economics literature, although there have been many theories describing the role of technology in trade and economic growth, the latest series of studies take technology as an endogenous variable, not only discussing the impact of technology on trade, but also analyzing the role of international trade and economic growth in technological progress. Combining the study of technological change, imperfect competition, economies of scale and economic growth is the latest development of international trade theory and cutting-edge topics.

The background of this new development of international trade theory is also related to the post-war changes in the pattern of international trade. After using the theory of economies of scale and imperfect competition to explain the reasons for the current "North-North trade" and trade between similar products, people will naturally explore further. Why are there economies of scale? How do economies of scale in industry and the international division of labor come about? If technological differences and development are one of the important reasons, how do technologies arise, develop and pass on? How is the development of technology related to international trade and economic growth? These questions have aroused great interest among international economists. Scholars combine the theory of international trade and growth theory, put forward many new ideas.

In recent years, in the study of international economics, there are many articles on international trade, technological change and economic growth. It can be divided into two parts in terms of its theoretical origin, one part is along the model of Ricardo, still taking technology as an exogenous variable, but analyzing the impact of technological change on trade patterns and the welfare level of countries from a dynamic perspective, and the other part takes technology as an endogenous variable, not only studying how technology affects trade and growth, but at the same time, taking technological development as a scientific research, investment, trade, and economic growth as a result, studying the relationship between technological change, international trade and economic growth with each other.

1. The theory of trade and growth with technology as an exogenous variable

(1) Trade patterns formed by technological differences

In addition to the trade doctrine of "economies of scale and imperfect competition", differences in technology as an exogenous variable have also been used to illustrate trade among developed industrial countries and among products of the same kind. In their study, Makusen and Svenson (1985) assumed that resource allocation ratios and demand preferences are the same in both countries. More than two factor inputs are required for the production of a product, but there are no economies of scale. However, if there is some slight difference in production technology between the two countries, labor productivity will be slightly different. In trade between the two countries, each country will export the product whose factor productivity is relatively high.

Davis, in his 1994 study, also assumed two industries in two countries. The first of these industries produces only one product, while the second industry produces two products that are not perfectly substitutable. Assuming that one of the countries in the production of the second industry with a slight technological difference with foreign countries, in the production of one of the products of the technology is slightly better than the other country. Under free trade conditions, the equality of factor prices would cause that country to produce and export this product, while the other country would produce and export the other product.

Marcussen, Swenson and Davis show that even in perfectly competitive markets with constant returns to scale, technological differences can lead to intra-industry trade.

(2) The impact of technological change on trade patterns and welfare

Krugman in 1986 studied the impact of technological progress on the welfare of developed and developing countries. In his model, he assumed that there are two types of countries: the more technologically advanced countries (developed countries) and the relatively technologically backward countries (developing countries), and that there are two types of products: technology-intensive products and non-technology-intensive products. These assumptions are somewhat similar to the Heckscher-Ohlin model, which develops in the following way: if technology changes (regardless of why it changes), what is the impact on countries' trade patterns and welfare?

If this technological progress occurs in the developed world, the result is that there is no downside. First, for the developed country, it is more technologically advanced, its products are more advanced, and since it is already technologically ahead, the creation of newer technology does not face much competition, nor does it threaten other countries, which cannot threaten it, so technological progress is good for it. Secondly, it is not bad for the backward countries, because the technology gap has widened, giving the backward countries more space to develop and catch up. Therefore, technological progress in advanced countries is beneficial to both types of countries. The only disadvantage to the advanced countries is that for some products that already have technological advantages, technological progress and the increase in production and export capacity may make the price of these products fall, the terms of trade may become unfavorable.

What if technological progress occurs in the backward countries? Krugman believes the result would be a narrowing of the gap between the two groups of countries, a competition for the formerly advanced countries, to their detriment. Latecomer countries would reduce imports because of their ability to produce such products, resulting in a twofold outcome: first, a decrease in the price of such products, to the detriment of the advanced countries, and second, if such products require intensive use of the already scarce resources of the latecomer countries, then the latter are also disadvantageous to the latter countries.

2. Trade and Growth Theory of Technology as an Endogenous Variable

Another aspect of the development of trade theory has been to analyze technology as an endogenous variable, to study the causes of technological change, and also to study the impact of technological progress on trade patterns and social welfare as a result of production and trade. There are two sources of technological change, one is passive, not developed through specialized research, but learned by watching and doing, through economic behavior, which is called "learningby doing". The technology mentioned here is not only production technology, but also includes management knowledge. The other type of technology is active, created by oneself. This kind of technological change is a kind of innovation. Technological innovation is generally the result of research and development (Research and Development, or R & D).

(1) "Technology Spillovers" (Spillovers) and "Doing Middle School" (Learning-by-Doing)

Not all so-called technological change or technological progress is an unprecedented new invention. In many cases, technological advances are simply the result of learning what others have already learned. This learning process is sometimes not the original purpose, but a natural by-product of engaging in production or other economic behavior. As the owners of advanced technology, sometimes not intended to transfer or disseminate their technology, but in trade or other economic behavior naturally exported technology, known as technology "spillovers" (Spillovers). Whatever the technology, there is a process of spillover. Most of the technological progress in the form of "learning by doing" is gained from technological spillovers. Technology spillovers can be divided into international, domestic, inter-industry and intra-industry situations.

a) International Technology Spillover

International technology spillover refers to the direct or indirect (e.g., through trade) dissemination of technology to other countries, so that the producers in other countries have gradually mastered these technologies.

In order to illustrate international technology spillovers, let's assume that there are two countries: country A and country B. Each country produces two products, X and Y. When there is no trade between the two countries, each country's production is determined by its own production technology and resource allocation, with country A having a comparative advantage in the production of X, and country B having a comparative advantage in the production of Y. If there is trade between the two countries, according to the principle of "trade", country A has a comparative advantage in the production of X and country B in the production of Y. If there is trade between the two countries, according to the theory of comparative advantage, country A will specialize in the production and export of X, and country B will specialize in the production and export of product Y. This is the initial equilibrium after trade occurs.

Now let's take it a step further and assume that technology cannot be monopolized and can be "spilled over" to other countries through trade in goods. As a result of trade, producers in both countries acquire each other's production technology and have the possibility of adapting it to their own production. This spillover of technology on an international scale can have different outcomes. In one case, country A has a comparative advantage in producing good X, but country B has an absolute advantage in the more advanced technology for producing X. Country A introduces the technology for producing good X in country B, increasing the productivity in which it already has a comparative advantage. This outcome plays to the country's comparative advantage in resources and favors country A's long-term growth. In addition, country A's increased production of commodity X, which had been a relative shortcoming of country B and which was no longer produced after the division of labor and trade between the two countries, also benefits country B by lowering the price of imports from country B. This spillover of technology allows country A to import technology from country B that is already in its comparative advantage and to increase its productivity. This technology spillover makes the original trade pattern determined by "comparative advantage" to be determined by "absolute advantage". As a result of the technology spillover, both countries benefit.

But if country B's technology for producing good Y is more advanced than country A's, and country A learns that technology from country B and uses it to improve and develop its product Y, in which it does not have a comparative advantage, then the result of this technology introduction is import-substitution growth for country A, but it is a threat and competition for country B. If country A produces good Y, which requires intensive utilization of the technology, then country A can use it to improve and develop its product Y, in which it does not have a comparative advantage. It is also not necessarily beneficial to country A's long-term development if its production of Y requires the intensive use of its scarce resources. Trade and technology spillovers may lead development in the "wrong" direction, affecting the long-term development rate of both countries (see Yanagawa, 1993).

b) Domestic technology spillovers

Domestic technology spillovers refer to the diffusion of technology within the country. Domestic technology spillover is faster than learning foreign technology due to geographical, linguistic and cultural reasons.

Domestic technology spillovers were discussed by Krugman and Lucas in the late 1980s. In Krugman's (1987) model, he assumed that there were two countries, A and B, producing a range of products. Either country will have the initial lead in the production technology for some of the products. Although technology can spread internationally, technological spillovers within the home country will be faster. Over time and with a faster process of domestic spillovers, there is a potential for accelerated development of the country's original leading industries, the original comparative advantage will increase, the "domestic technology spillovers" will also make the other country more advanced in the products in which they have a comparative advantage, and the domestic diffusion of technology widens the differences between the countries.

Lucas's (1988) model is somewhat similar to Krugman's, except that he assumes a series of countries that produce two products, X and Y. Each country has the same labor force and labor productivity, but different initial levels of technological knowledge about the two products. Some countries produce X and others produce Y, creating an initial international division of labor. As a result of domestic spillovers of technology, both countries producing X and those producing Y continue to increase their labor productivity in their respective specializations, thus increasing the gap between countries in their mastery of technological knowledge of the two products. In general, countries in the international division of labor in the position is difficult to change, unless the product labor productivity growth rate can not keep up with the rate of decline in the price of the product, to change the status of the original international division of labor, from the production of one product to another product production, but only those who are on the margins of the original countries (marginal country).

Krugman and Lucas's analysis shows that: a country's initial comparative advantage, industrial choice and position in the international division of labor may be related to its own technological knowledge and resource allocation, may also be due to accidental factors, but once the initial industrial structure is formed, the spillover of the domestic production technology to make a country in these industries in the productivity of other countries faster than the other countries will make the country in these industries in the leading position more consolidated. lead in these industries even more solidly. This in a sense explains why some countries specialize in some industries and others in others, which is related to domestic technology spillovers. Moreover, once a certain pattern of production has been established, it is not easy to change it, because the size of the industry and the domestic technological spillovers will continue to increase labor productivity, and as long as costs increase at a lower rate than the rate of increase in labor productivity, it will be profitable and continue to exist. History plays an important role in determining a country's long-term production and trade patterns.

c) Inter-industry and intra-industry technological spillovers

Technological spillovers can also occur between different industries (inter-industry) and within the same industry, many industries have different products, but many of the resources used are the same, and how to improve the factor productivity of the industry is a contribution to all industries. In addition, the concept of "technology" here is not only limited to specific production methods, but also includes management and other technical knowledge. Therefore, the technological advantages possessed by one industry may also spill over to other industries, resulting in productivity improvements in other industries and having an impact on the long-term development of society. [(1)c]

There may be different industry clusters within the same industry, each producing similar products but not with the same production technology. There will also be different production advantages over similar industry clusters abroad. International trade and the resulting competition and technological spillovers will reduce the technological gap between industry clusters.

(2) Research for Development (R&D) and Technological Innovation (Innovation)

Another source of technological change is technological innovation, which is the result of an investment, development and research. The development of new technologies is mainly characterized by: a) increased factor productivity, producing more with limited resources or using fewer resources with guaranteed output; and b) improved product quality and the development of new products.

Technological innovation or exploitative technological progress can occur in the context of increased specialization. With the socialization of production, the division of labor is becoming more and more subtle, and a final product can be produced by one enterprise into many. The same enterprise can also be divided into many departments, each of which produces only one part of the product. Increased specialization allows each department to concentrate on only a small area of large-scale production, and in the production of this specific component, it is possible for the firm to make a profit by reducing costs. In other words, the increase in specialization makes it possible for profit to be made no longer only from the final product, but for each segment of production to stand alone and have the possibility of making a profit. The pursuit of profit creates an incentive to improve technology at each stage of production.

Developmental technological progress is also often obtained in the development of new products. Competition in the marketplace forces firms to develop new products or improve the quality of their products, resulting in new technologies.

Unlike "learning by doing", technological innovation or developmental technological progress requires large investments and research, and therefore firms will develop new technologies only if they can ensure that these investments are profitable. Therefore, two conditions are necessary for a country to achieve significant developmental technological progress: (1) protection of intellectual property rights, because without such protection, firms will not have the incentive to invest in and conduct research on new products if the risks they take are not symmetrical with the benefits they receive. (2) Investment in research should be encouraged. Dry secondary school can also improve technology, but after all, there are limitations, after all, can only shorten the gap with the advanced technology, a country to lead technologically, there must be development-oriented technological advances, but development-oriented technological progress is the need to have the law and investment to ensure.

International trade and development-oriented technological change has a mutually reinforcing relationship, the impact of trade on technological innovation, not only through the competition in the international market to force countries to strive to develop new technologies and new products, but also through the international technological spillover to the countries of the opportunity to inspire each other. The development of new technology is no longer just the behavior of individual countries, but has become the **** with the efforts of all countries. Here, too, there is a question of economies of scale in technology development. In a sense, international flows of trade and technology can lead to "economies of scale" in research and development and reduce the cost of research and development in all countries. Once a new technology has started in one country, it can be introduced in another country and built upon without repeating the same process. Of course, this requires a lot of political and technical conditions, but from the economic point of view, this is an optimal way of resource allocation.

On the other hand, technological innovation also affects trade patterns. In both the technology-as-exogenous-variable and the "learning-by-doing" models, the initial pattern of trade is given, and it is assumed that there is a gap in production technology between countries, but there is no discussion of why there is a gap. The technology-as-endogenous-variable model, on the other hand, reveals the underlying causes of the technology gap. Looking at history, we can see that, while the process of international spillovers of technology within and outside the country and the process of stem-learning has the potential to reduce the technological gap between countries, the pre-existing resources and technological conditions of the country still play a crucial role in a country's long-term development and position in the international division of labour. Therefore, strengthening investment in development research and the continuous development of new technologies are necessary measures to improve a country's trade position and ensure long-term economic growth.

Three, the new theory of international trade on China's further reform and opening up of the inspiration

The past fifteen years, although we have made great achievements in opening up, but trade policy is still subject to many traditional concepts of bondage. We have made a lot of efforts in exporting, but we have a lot of worries about opening up the domestic market. In the process of applying for the restoration of GATT status, we regarded the expansion of imports and the opening up of the market as a kind of price for entering the GATT and an "obligation" that we had to undertake in order to obtain certain rights, and the idea of this was to a large extent originated from the theory of "protection of childish industries". The idea is largely derived from the theory of "protection of infantile industries".

China is still a developing country, the protection of certain industries is necessary, understandable. The question is, how to choose the object of protection? What methods are used to protect? What are the prospects and costs of protection? We must fully estimate the price to be paid for protection and try to minimize the cost to achieve our goal of developing advanced or infant industries.

Classical and neo-classical theories of trade have analyzed the cost of protection to consumers and to national welfare as a whole. The doctrine of technological spillovers and learning by doing reveals the "externalities" that protection loses, especially by restricting imports of high-technology products such as computers, not only to consumers, but more importantly, by delaying the process of technological spillovers and learning by doing. Computer and other scientific and technological knowledge products and general consumer goods are not the same, the use and popularization of computers include the popularization of science and technology and labor productivity. The externalities that can be brought about by the rapid popularization of computers cannot be measured in monetary terms. Moreover, the key to the development of the computer industry is not hardware but software, and it is only on the basis of popularization that there can be sufficient human capital and market demand to promote the development of software. The cost and results of protecting infant industries by means of trade barriers must be taken into account.

The trade doctrine of economy of scale also puts forward many new ideas for our trade policy. The new trade theory reveals the monopolistic competition in the contemporary international market and the predominance of trade in industrial manufactured goods, and the diversity of industrial products makes it unlikely that any one country will have enough resources to produce and export all industrial products. The space for international trade has become increasingly large, and it is possible to import and export at the same time, even within the same industry. Modern international competition is not confined to the gains and losses of individual products, so there is no need to restrict the importation of foreign quality products, and it is not necessary to produce products that are already dominant abroad through protection. Opening certain markets to the outside world does not mean that domestic industries of the same kind cannot develop. Others have produced some types of models, we can focus our resources on the production of other or new types of models, and through economies of scale to reduce the cost of exporting abroad.

How can economies of scale be realized in certain industries? The trade doctrine of economies of scale raises the question of "strategic trade protection". Due to the imperfect competition in the international market and the existence of economies of scale of modern enterprises, how to expand the international market share in order to expand production and reduce costs has become a key factor in the ability of enterprises to win in the international competition. If the government can correctly select certain industries that have development prospects and can give full play to the country's resource advantages, and help them to reach a certain production scale through policy support, it will be beneficial to the country's interests and development. This kind of trade protection focuses on the long-term strategic development of a country, known as "strategic trade protection".

Many countries have used strategic trade protection policy, such as Japan in the post-war economic development process, but also on many industries have been protected. It protects an industry for a period of time and then transfers it. The purpose of protection is only to hope that during the protection period, the industry itself produces a kind of technological spillover and the ability to grow continuously on its own, to improve labor productivity and competitiveness in the short term. The period of protection is short, and the industry under protection is in constant flux. Krugman borrowed Givens' (1982) term, called it "the Narrow Moving Band" (the Narrow Moving Band).

Whether it is a policy of free trade or "strategic trade protection", the choice is based on how to maximize the interests of the country. Such benefits must be estimated not only statically, but also dynamically. The pros and cons of any policy for any industry need to be analyzed as precisely as possible. The new theory of international trade does not tell us whether we should or should not protect, but provides more questions to consider for our trade policy choices. The simple use of trade barriers to protect infant industries is a reactive and obsolete approach, and the costs are not insignificant. And from the perspective of strategic development of certain products (not necessarily the whole industry) to implement the protection may bring long-term advantages and benefits, but these products are not necessarily naive industries, the means of protection is not necessarily trade barriers, can be less costly industrial policy or consumption policy, the period of protection should be short, this protection is a positive and promising protection.

Policy

1 Basic Concept of International Trade Policy

2 Protection Trade Policy

3 Free Trade Policy

4 China's Foreign Trade Policy

Tariff Policy

1 Concepts and Characteristics of Tariffs

2 Types of Tariffs

3 Tariffs Collection Methods and Rates<

4 Provisions of China's Customs Tax Administration

5 Export Tax Rebate

Non-Tariff Barrier Policies

1 Concept of Non-Tariff Barrier and Its Main Characteristics

2 Main Measures of Non-Tariff Barrier

Export Encouragement and Control Policies

1 Measures for Encouraging Exports

2 Policies of Establishing Special Economic Zones for the Promotion of Policies for the establishment of special economic zones to promote the development of foreign trade