Dynamic benefits of trade and trade strategy choice of developing countries.
(Liuli, Graduate School of Chinese Academy of Social Sciences)
The traditional view is that developing countries should implement an inward-looking trade strategy that relies on domestic market and domestic trade because of its vast domestic market, huge domestic trade potential and reduced importance of foreign trade. The author holds different views on this. There are many reasons, the most important of which is that the traditional view ignores the indispensable dynamic interests of foreign trade in economic development. Based on the dynamic interests of foreign trade, this paper analyzes the importance of foreign trade (hereinafter referred to as "trade" directly by convention) to developing countries, and probes into the trade strategy choice of developing countries.
A general analysis of the dynamic benefits of trade
According to the basic principle of international trade, a country is always committed to exporting products that can be produced at a relatively low cost, and importing products that need to be produced at a relatively expensive cost before trading, thus increasing its economic welfare without changing the total amount of resources. This is the static benefit of trade. It includes two aspects: first, the benefits obtained from the exchange, that is, the products that cannot be produced in China or the products with high domestic production costs are obtained through trade, so that consumers can obtain a higher level of satisfaction; The second is the benefits of specialization, that is, by participating in the international division of labor and specializing in the production of products with comparative advantages in China, the efficiency of resource utilization in China can be improved.
The static income of trade reflects the role of trade under the condition that the total resources, production costs and technical conditions remain unchanged. At this time, the role of trade is only to realize the potential benefits that existed before the occurrence of trade, so it can not really reflect the role of trade in a country's economic development. In fact, trade has a more important dynamic interest, that is, trade can promote a country's long-term economic growth and improve its economic structure. The role of trade in economic development is mainly reflected in its dynamic interests. Let's analyze it from three aspects: industrial speech, technological progress and institutional innovation.
1. Trade promotes industrial evolution
The continuous upgrading of industrial structure is the core content of long-term economic development. Trade can promote the evolution of industrial structure from the following aspects:
First of all, by participating in trade activities, a country can find its own comparative advantage and develop its own industry around it. On the one hand, the specialization of production and the optimal allocation of resources caused by trade can greatly promote the development of domestic advantageous industries; On the other hand, the import of foreign production factors can overcome the bottleneck of domestic factors and maximize the development of domestic advantageous industries. With the change of China's comparative advantage, the industrial structure tends to be advanced. In the early stage of a country's economic development, there is often abundant labor force and lack of capital and technology. At this time, by producing and exporting labor-intensive products and importing capital and technology-intensive products, the rapid development of labor-intensive industries in the country can be promoted. With the passage of time, China's comparative advantage has changed, the labor force is no longer abundant, and capital and technology are no longer in short supply, so the country's capital-intensive industries and technology-intensive industries have also developed accordingly, thus realizing the advanced industrial structure.
Second, trade can provide market conditions for the establishment of emerging industries. When a country establishes a new industry, domestic demand is often insufficient to meet the requirements of economies of scale. At this time, trade can support the development of this industry by providing new demand. Especially when a country's demand structure is inconsistent with its resource structure, industrial development based on the country's superior resources can hardly be established without trade. For example, without external demand and foreign trade, the oil industry, the pillar industry of Middle East countries, cannot develop.
Third, the international competition brought by trade can ensure the efficiency of industrial evolution to the greatest extent.
2. Trade promotes technological progress
Technological progress is the leading driving factor of economic development, and trade can also promote economic development by promoting technological progress. This is mainly manifested in the following aspects:
First of all, trade is the main supply channel for a country's technological progress. A country's technological progress needs a lot of technology, which is far from being satisfied by its own inventions. "One tenth of the development of world civilization is original and nine tenths is transplantation." This is becoming more and more important in the modern economy. On the one hand, the demand for technology in modern economic development is getting stronger and stronger, and the role of technological progress is becoming more and more important; On the other hand, modern technological inventions are more and more collective, large-scale and international. Any country's technological inventions are increasingly inseparable from the outside world, and it has to introduce a large number of foreign ready-made technologies, especially basic and original technologies. It can be said that no country, even the most developed country, can maintain its long-term technological progress without introducing foreign technology.
Second, trade has an important "technology spillover" effect and "learning by doing" effect. The so-called "technology spillover" and "learning by doing" effects of trade mean that foreign advanced technologies can be brought indirectly through trade activities, and these advanced technologies can "spill over" to other industries in China. "... when importing materials, you can also bring in new products, new technologies, new standards, new concepts and how to master their technical assistance. In fact, trade is closely related to the entry and exit of technical experts such as entrepreneurs and industrial engineers. Because of their inbound and outbound information flow, technology is also transferred across borders. ..... exporting all kinds of finished products can get suggestions and technical assistance from foreign buyers on various issues, involving all businesses from product design, production technology to cost calculation. ”〔②〕
Third, trade provides a powerful impetus for technological progress. "... foreign trade is the cause of all kinds of stimulation and pressure caused by international competition, which is regarded as the main driving force to actually master technology and catch up with the standards of foreign competitors. Partly for this reason, it is valuable to learn export business and even try to export manufactured goods. Similarly, import competition can also promote the improvement of product performance ... import competition helps to eliminate hopeless and inefficient domestic enterprises, and at the same time urges other enterprises to make greater efforts and seek higher performance standards. ”〔③〕
3. Innovation of trade promotion system
Institutional innovation and technological progress are two wings of economic development, and they are equally important to economic development. Similar to promoting technological progress, trade can also promote institutional innovation.
First of all, many systems can be introduced as trade goods, thus expanding the selection set of institutional innovation and saving the cost of institutional innovation. On the one hand, through the introduction of the system, the input cost of "social basic science" can be saved; On the other hand, while introducing the system, we can also learn from the ready-made experience of other countries in maintaining and consolidating the new system, thus saving the maintenance cost in the process of system innovation.
Secondly, trade can also promote the institutional innovation of the whole country through "spillover" effect and "learning by doing" effect. Trade activities strengthen the information exchange at home and abroad, broaden people's horizons and help to form the ideological foundation needed for institutional innovation. At the same time, the foreign trade department is often the first adopter of the new system, which is similar to the "first action group" of institutional innovation and has an important demonstration role for institutional innovation. Through the learning effect, the new system can spill over to other departments.
Third, trade can also stimulate institutional innovation on the demand side. On the one hand, trade leads to the increase of market and economic scale, and institutional innovation is urgently needed to reduce transaction costs; On the other hand, the external competition brought by trade forces domestic economic entities to actively carry out institutional innovation.
/kloc-in the 0/9th century, Marshall, a master of neoclassical economics, clearly pointed out in his masterpiece Principles of Economics: "The reason that determines the national economic progress belongs to the research category of international trade." This sentence brilliantly illustrates the important role of trade in a country's economic development, especially in long-term economic growth and economic structure evolution. In the contemporary world economy with rapid technological progress and economic structure, the dynamic benefits of trade in promoting industrial evolution, technological progress and institutional innovation are becoming more and more important.
Second, the importance of trade in developing countries is viewed from the dynamic interests of trade.
The traditional view is that developing countries have a vast domestic market and many domestic trade opportunities, and they can maintain sustained economic growth by relying on the domestic market, so the importance of foreign trade has declined. Compared with domestic trade, international trade seems irrelevant. The traditional view ignores the role of foreign trade in the economic development of developing countries, based on the fact that foreign trade is equivalent to domestic trade, and domestic trade can replace the function of foreign trade. As scholars who hold this view say: "From the perspective of supply-side enterprises, there is no essential difference between foreign trade and domestic trade, which is the last stage for enterprises to realize product value and the key to maintain and expand reproduction. Enterprises must also choose between domestic market and foreign market; The total amount of export and domestic sales reflects the market size, output value and surplus that enterprises can obtain. It is the consistency of this function that determines the substitution relationship between domestic trade and foreign trade ... "(4) Because of the substitution relationship between foreign trade and domestic trade, foreign trade is obviously in a secondary position for large developing countries with many domestic trade opportunities.
Indeed, from a purely static point of view, foreign trade is only "the final realization stage of product value", and it is the way in which commodity capital is transformed into monetary capital in the process of social reproduction. At this time, there is no essential difference between foreign trade and domestic trade, and its function can be replaced by domestic trade. However, it is one-sided to interpret the function of foreign trade from a static perspective. Because foreign trade has not only static interests, but also many indispensable dynamic interests, which domestic trade simply does not have.
The fundamental task of economic development in developing countries, including large developing countries, is to establish a modern economic structure and realize economic modernization. Foreign trade is an indispensable and effective way to introduce modern economic structure. At the same time, under the conditions of many developed countries, transplanting modern economic structure through foreign trade and other means can not only make developing countries enjoy the "late-comer advantage", but also meet their own survival needs. Because the process of developing modern economic structure from the inside is extremely slow, I am afraid it will be swallowed up in the competition with advanced countries before the evolution is successful. Although "building a car behind closed doors" and "being beaten in the back" are different sources, they often go hand in hand! Of course, no passion can replace theory. Let us illustrate the importance of foreign trade of developing countries from three dynamic aspects: industrial evolution, technological progress and institutional innovation.
1. Trade and industrial evolution of developing countries
The above-mentioned role of trade in a country's industrial development is fully applicable to large developing countries. In addition, trade is of special significance to the industrial development of developing countries. This is mainly manifested in the following aspects: First, the change of world trade structure reflects the evolution law of world industrial structure, so trade can provide signals and directions for the evolution of industrial structure in backward developing countries. This is an important aspect for developing countries to enjoy the "late-comer advantage". Second, through foreign trade and participation in international division of labor, we can absorb mature products and industries transferred from advanced countries, thus accelerating the pace of industrial structure evolution. Third, due to the shortage of resources, especially capital, it is impossible for large developing countries to choose a balanced industrial development model and can only take an unbalanced development path. Foreign trade is a necessary condition for unbalanced industrial development.
Japanese scholar Kaname Akamatsu's "flying geese industry development" theory and American scholar Vernon's "product life cycle" theory vividly describe the dynamic process of trade promoting industrial development in backward countries. The theory of "flying geese industry development" was summed up by Kaname Akamatsu by investigating the development process of Japanese cotton textile industry. According to this theory, the industrial development of backward countries basically goes through the following three stages: First, the import stage. When the demand for a product grows, domestic production is difficult and there are supply conditions, it can only be met by imports. Followed by the domestic stage. The import of products creates market conditions for domestic production of this product, which is followed by the maturity of production factors such as technology, labor and capital. When domestic production conditions are available, domestic production will replace imports. Finally, the export stage. With the maturity of domestic production conditions and the application of economies of scale, the country has a competitive advantage in producing this product, and the product is exported to foreign countries. The above-mentioned process of "import-domestic production-export" can be vividly described as three geese, which vividly reflects the promotion of trade to the industrial development of backward countries.
The theory of "product life cycle" describes the process of trade promoting the transfer of industrialized countries to developing countries from the perspective of product innovation. According to this theory, the production of new products generally begins in a developed country, which monopolized the production and export of this product from the beginning. With the development of markets and the regularization of production technology in other developed countries, these countries will gradually become major producers and export suppliers. When the product is widely known all over the world and the production technology is standardized, developing countries replace developed countries as major producers and exporters by virtue of their advantages in resources and labor.
2. Trade and technological progress of large developing countries
If trade is an indispensable condition for technological progress in any country, then trade is the primary condition for technological progress in developing countries. It can be said that without foreign trade, including technology trade, there would be no technological progress in developing countries.
As a developing country, trade plays a special role in the economic development of large developing countries, that is, foreign trade is "the basic entry channel of modern technology". As mentioned above, modern scientific and technological innovation is worldwide, and the scientific and technological activities of any country must and can only be based on the existing scientific and technological achievements in the world. This is particularly important for developing countries. In the modern economy, which started from the western industrial revolution, most economic technologies and methods are more flexible than those of western developed countries. In order to realize economic modernization, developing countries must actively introduce these technologies and methods. For example, according to the statistics of the World Intellectual Property Organization, the share of developing countries in the world invention patents of 1967 ~ 1979 is only 0.4%, and that of the world industrial design patents of 1975 ~ 1980 is only 1%,/. Of course, technological innovation in developing countries is also very important, but it must be based on making full use of foreign ready-made technologies, especially basic technologies. Otherwise, it is impossible to modernize the economy of developing countries only by building a car behind closed doors or mainly by so-called "originality". From a practical point of view, all emerging countries that successfully realize economic modernization attach importance to the introduction and absorption of foreign advanced technology. Japan, Brazil and South Korea are typical examples.
Many scholars at home and abroad always oppose trade and technological progress intentionally or unintentionally when demonstrating the relationship between trade, technological progress and economic development in developing countries, so as to belittle the role of the former. As Lewis said: "The long-term growth engine is technological change; In addition to laying the foundation for development in the initial stage, international trade cannot replace technological change. " Of course, in the economic development of developing countries, trade can not replace the role of technological change, but it can not belittle the role of trade. Because the technological changes in developing countries are inseparable from trade.
3. Trade and institutional innovation in developing countries
As time goes by, more and more development economists realize that the fundamental reason for the backwardness of developing countries lies in institutional arrangements. In developing countries, there is a widespread "poverty system equilibrium trap". That is, despite poverty, people are still satisfied with the established institutional arrangements and have no will or ability to change the current system. It is difficult to break the trap of "poor institutional balance". On the one hand, there is a lack of institutions that can bring about economic development; On the other hand, due to the constraints of natural environment, political system, ideology and other factors, people also lack the demand for institutional changes. For large developing countries, it is particularly difficult to break the "poverty trap of institutional balance". For example, a large developing country has a large population and a vast territory. Under the realistic condition of the general lack of patent protection system, the externality of the new system supply will be more prominent. For another example, the group dependence caused by the large population makes it difficult for the "first action group" of institutional innovation to stand out.
The introduction and influence of external factors are very important for institutional innovation in the case of "institutional equilibrium trap" in developing countries. Trade is the basic way to introduce external factors. In this way, the above-mentioned role of trade in promoting institutional innovation has not weakened at all for large developing countries, but has greatly enhanced it. In particular, the economic systems that adapt to the development of modern economy are mainly stronger than developed countries, and these modern economic systems mainly enter developing countries through trade. In addition, the demonstration effect of information exchange, institutional reform and the pressure of international competition brought by trade are also of special significance to institutional innovation in developing countries.
To sum up, compared with other developing countries, trade plays an equally important role in the economic development of large developing countries. Of course, a large developing country has the advantages of a vast domestic market and many domestic trade opportunities, but it can never replace the role of foreign trade, especially in the driving force of economic development such as industrial structure evolution, technological progress and institutional innovation.
Thirdly, pursuing the dynamic benefits of trade: the trade strategy choice of developing countries.
Because the dynamic benefits of trade play an indispensable role in the economic development of developing countries, developing countries must attach great importance to the role of foreign trade when choosing trade strategies, and can no longer ignore the role of foreign trade by virtue of the huge domestic market as in the past. In particular, we should fully enjoy the dynamic benefits brought by trade by choosing appropriate trade strategies.
1. Developing countries should pursue the dynamic benefits of trade as their trade strategy.
Basic object
According to the different strategic objectives, the trade strategies of developing countries can be divided into two types: one is the trade strategy of pursuing static interests. In this strategy, although the development of trade can objectively bring some dynamic benefits, the basic purpose of developing trade is to pursue the static benefits of trade, that is, only when the existing resources and technological structure remain unchanged can the economic welfare of the country be increased. As for the dynamic benefits of trade in promoting long-term economic growth, industrial evolution, technological progress and institutional innovation, it is not the main goal pursued by this strategy, and the dynamic benefits of trade are not obvious after the implementation of this strategy. The "export-oriented trade strategy of primary products" implemented by many developing countries, especially some small resource countries, is a typical trade strategy that pursues static interests. The fundamental feature of "export-oriented trade strategy of primary products" is to simply rely on the export of primary products in exchange for manufactured goods of other countries, mainly consumer goods, to meet the needs of domestic consumption, rather than seeking to establish a modern economic structure through trade.
The other is the trade strategy of pursuing dynamic interests. Contrary to the trade strategy of pursuing static interests, the basic purpose of this trade strategy is to pursue the dynamic interests of trade in promoting long-term economic growth, industrial evolution, technological progress and institutional innovation. The "export-oriented trade strategy" implemented by some developing countries belongs to the trade strategy of pursuing dynamic interests. This strategy is also called "export substitution trade strategy", that is, according to international comparative advantage, by replacing traditional primary products with finished products, the industrialization and modernization of domestic economy are promoted.
As a developing country, the priority goal of economic development in developing countries is also to realize economic industrialization and modernization, which requires that their trade strategies must be conducive to enjoying the dynamic benefits of trade in promoting industrial evolution, technological progress and institutional innovation. Furthermore, if some small resource countries can maintain the normal life of their residents only by exporting primary products, so they can pursue a trade strategy of static interests, then for a large developing country with a large population, it is impossible to maintain the survival of their residents only by exporting primary products, and it is also impossible to implement a trade strategy of pursuing static interests. Moreover, the terms of trade of primary products are deteriorating in the long run, which is very unfavorable to the long-term economic development of large developing countries. Therefore, developing countries should take the pursuit of dynamic interests as the basic goal of their trade strategy.
Developing countries should implement an open trade strategy.
Before the 1980s, under the guidance of the traditional theory that the role of trade is insignificant or even harmful, the vast number of developing countries, including large developing countries, have long implemented the inward-oriented trade strategy of substituting domestic production for imports and domestic sales for exports. The implementation of this strategy has not promoted the economic development of developing countries, but has worsened their own resource allocation and widened the gap with developed countries. The World Bank and the International Monetary Fund once divided 4 1 major developing countries and regions into four categories according to the openness of trade strategy: strong extroversion, medium extroversion, medium introversion and strong introversion. Among these developing China countries, there are both small countries and big countries. For example, Brazil is a moderately extroverted country, Mexico is a moderately introverted country, and India is a strongly introverted country. This study shows that the more open the trade strategy, the better the economic performance, regardless of the size of the country; The inward trade strategy makes the economic performance worse: the gross domestic product (GDP) and total factor productivity (TFP) of export-oriented powers increase by 8.05% and 3.2% respectively. The average annual growth rates of GDP and total factor productivity in medium export-oriented countries are 4.35% and 0.85% respectively. At the same time, the indicators of moderately introverted countries and strongly introverted countries were only 3.35%, -0.2% and 2.25%,-0.5% respectively [7].
The most fundamental reason why the inward-looking trade strategy is so bad is that it excludes trade interests, especially the dynamic interests of trade. The most fundamental reason for the success of the open trade strategy is that it can fully enjoy the benefits brought by trade, especially the dynamic benefits. Since 1980s, most developing countries have changed their ways, implemented trade liberalization, and turned inward-looking trade wars into slightly open trade strategies, which greatly promoted their economic development. For a large developing country with a vast domestic market, it is also necessary to implement an open trade strategy. Because only in this way can we fully enjoy the dynamic benefits of trade and promote the development of the whole economy through trade activities.
3. The trade strategy of developing countries must attach importance to the role of import trade.
Because of the deep-rooted concept of mercantilism, when people talk about the role of trade, they always consciously or unconsciously emphasize the role of exports and ignore the role of imports. For example, from the theory that Robertson and Knox's trade is "the engine of economic growth" to people's high evaluation of "export-oriented" trade strategy, they are all from the perspective of export. The viewpoint of "domestic and foreign trade substitution" mentioned above is only from the perspective of export, but the conclusion is to deny foreign trade.
In fact, for large developing countries, the role of import is as important as that of export, even more important than that of export. Because developing countries want to fully enjoy the dynamic benefits of trade, they must first rely on imports: without imports, it is almost impossible to absorb and transplant foreign economic structures such as modern technologies and systems. As far as trade activities are concerned, import can be said to be the basic purpose and starting point of developing countries' trade-the basic purpose of developing countries' trade activities is to import advanced foreign economic structures, thus promoting their own economic development. Here, exports have basically become a means of serving imports-providing foreign exchange support for imports. Emphasizing the role of import is one of the basic characteristics of the trade strategy of developing countries with relatively broad domestic markets, which is also the fundamental difference between the open trade war of developing countries and the "export-oriented trade strategy" of developing countries.
Of course, when choosing a trade strategy, developing countries should not only consider the single factor of pursuing the dynamic interests of trade, but also consider a variety of factors comprehensively. However, developing countries must choose trade strategies based on two basic principles: first, they can fully enjoy the dynamic benefits of trade; The second is to give full play to the broad advantages of the domestic market. Both must be considered and cannot be ignored. Based on this consideration, the author puts forward a new trade strategy suitable for developing countries-"domestic support, opening to the outside world" trade strategy. That is, based on international comparative advantage, relying on the domestic market, supplemented by moderate protection, the trade strategy of comprehensive opening to the outside world [8].
Precautions:
① reischauer: A New Theory of Modern Japan, Joint Publishing Company, 1992, p. 8.
② ③ Donald B. Kissing: Trade Policy of Developing Countries, China Financial and Economic Press, 1986, p. 4.
④ Xianliang Xiong: The decline of the relative importance of foreign trade of big countries, Finance and Trade Economy,No. 1995.
⑤ Economic Growth Center of Yale University: New Pattern of Development Economics-Progress and Prospect, Economic Science Press, 1987, p. 284.
⑥ Arthur Lewis: Growth and Fluctuation, Huaxia Publishing House, 1987, p. 350.
⑦ International Monetary Fund: World Economic Outlook,No. 1990, p. 69.
⑧ Liuli: A New Theory on Developing Countries' Domestic Market and Trade Strategy, International Economic and Trade Exploration, No.5, 1996.
Notes about words not stored in fonts:
@ 1 words Wang Jiafan
Source of the original text International trade issues
Original name Beijing
Original version number 199706
The original page number is 1-7.