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Dynamic Comparative Advantage and China’s Automobile Industry

Author: ZuoJia
Tutor: LangLiHua
School: Capital University of Economics
Course: International Trade
Keywords: Comparative Advantage Dynamic Comparative Advantage Automobile industry
CLC: F426.471
Type: Master's thesis
Year: 2005
Downloads: 922
Quote: 6
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Abstract


Chinese automobile industry has been confronted with a dilemma after China’ s entry into WTO. Whether to pay great attention to develop the industry or to enhance the traditional industries, such as toys, shoes and textile, has become more crucial for the strategic automobile industry. The article aims to demonstrate the necessity and potential advantage, which automobile has possessed, and use the Dynamic Comparative Advantage Theory to account for the automobile-developing strategy.Based on abundant practice review, the Comparative Advantage Theory has enriched the contents by loosen the hypothesis founded by its inventors. And the theory also provides an entire series of method and knowledge structure to analyze why and how to support the automobile. Through both the normative and positive analysis, the thesis raises evidence how to cultivate the relative international competitiveness of the automobile industry.The main body of the thesis consists of four parts.Part I: The part is mainly about the main aim, method and structure of my dissertation.Part II: The part elaborates the basic content of classical Comparative Advantage Theory, and render the concept of "The Comparative Advantage’ s Trap" . "The theory of absolute advantage" & "the theory of comparative advantage" , established by Adam Smith and David Ricardo individually, as well as "The Factor Endowment" , was revealed the basis and the source of mutually-beneficial international trade .By reason of scrupulous hypothesis of the theories, it has the character of immobility. As a matter of fact, the developing countries didn’ t have much benefit according to their endowment of national resources and labour, whereas the gap between developing countries and developed countries had been enlarged. The developing countries was involved in "The Comparative Advantage’ s Trap" .Part III: In this part, the dynamic Comparative Advantage Theory givesthe explanation for such a fact. The dynamic character of factors is the reason why an economy has the dynamic comparative advantage. Then the economy will realize the upgrade of its industry’ s structure by cultivating accumulation of the factor.Part IV: I analyze the condition, weakness and potential comparative advantage of the automobile industry. For seeking rational industrial policy of our automobile, we should follow by other countries especially newly developed countries; Therefore, I have compared the Republic of Korea, Japan and Brazil, in hope that policy is emendated on the basis of experience.Part Vis the core of this paper. I attempt to give my own understanding about our industrial policy of automobile, to point out our major countermeasure adopted for promoting the industrial upgrade of automobile at present.

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CLC: > Economic > Industrial economy > China Industrial Economy > Industrial sector economy
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