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China’s Comparative Advantage in Knowledge-based Service Trade

Author: ZhangShuPing
Tutor: LiuWenLong
School: Northeastern University
Course: International Trade
Keywords: knowledge-based service trade Comparative Advantage Technology Progress Dynamic Changes Factor Accumulation Human Capital
CLC: F752.68
Type: Master's thesis
Year: 2010
Downloads: 37
Quote: 0
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Along with the rapid development of the economic globalization, service trade begins to play more and more important role in the world trade. As an important component of the service trade and more effect to other apartments of international trade, knowledge-based service trade has drawn more and more attention with its strong promotion to other trade items as well as its the powerful special role and vital status on a country’s economy. China’s service trade starts late. And with the high degree of industry monopolies and congenital deficiency, China’s knowledge-based service trade is under the obvious comparative disadvantage. So it is necessary for us to come up with discussion of rules on dynamic changes in knowledge-based service trade and to find a way to improve the comparative advantages in knowledge-based service trade.We think the comparative advantage is the cause of international trade in services as same as the international trade in goods. As we all known, comparative advantage comes from the different level of technology (i.e. productivity) and factor endowments of different countries. If the decisive factors which decide the changes of comparative advantages in knowledge-based service trade can be found, we can improve the comparative advantages of developing countries including China. Therefore, the study in the thesis will follow two paths, which are technology change and factor accumulation especially human capital accumulation, to be conducted. And empirical examination will be conducted to provide more persuasive power.In this paper, based on the balance of payment of China’s service trade from 1997 to 2009, firstly, I will use the Index of Normalized Trade Balance, Index of Revealed Comparative Advantage, index of Net Export Revealed Comparative Advantage to make an analysis on the international competitive and comparative advantage of China’s knowledge-based service trade; the analysis shows that the indexes have been not only at a very low level, but also have no trend of improvement. Then, we consider about influence of technology’s change and factor accumulation on the dynamic change in comparative advantages in knowledge-based service trade. In this part, we conduct some empirical examinations. As for the technology, we take the technology imitation, technology spillover and innovation into consideration to examine the influence they put on China’s knowledge-based service trade. As for the factor accumulation, we lay the research emphases on the human capital and draw the conclusion that accumulation of human capital plays a key role in improving the comparative advantage of knowledge-based service trade in China. Finally, give the trade strategies to enhance the international competitiveness of China’s knowledge-based service trade, according to the current development of China’s knowledge-based service trade.

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CLC: > Economic > Trade and Economic > States foreign trade > China's foreign trade > Import and Export Trade Overview > Special trade
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