Glamor Economics

Chapter 192

Chapter 24 Section 3 International Division of Labor Highlights Cooperation Advantages——Comparative Advantages

In the 18th century, the British economist Ricardo proposed the theory of comparative advantage.The theory of comparative advantage can be expressed as: between two countries, the gap in labor productivity is not equal in any commodity.For countries with absolute advantages, they should concentrate their efforts on producing commodities with greater advantages, while countries with absolute disadvantages should concentrate their efforts on producing commodities with less disadvantages, and then through international trade and mutual exchange, both save labor and get benefits. benefit.We can take the example of porcelain produced in China and wine produced in the United States.

Before the international division of labor, China required 1 labor days to produce 100 unit of porcelain, and 1 labor days to produce 120 unit of wine; the United States required 1 labor days to produce 90 unit of porcelain, and 1 labor days to produce 80 unit of wine.According to the theory of absolute cost, trade between the two countries is impossible.Because in the United States, the production cost of both products is lower than in China, they don't need to import from China; China also has nothing to sell cheaply.But through cost comparison, we can find their respective comparative advantages: the comparative cost of the United States to China: porcelain is 90/100=0.9, wine is 80/120=0.6666, the comparative advantage of the United States lies in wine; the comparative cost of China to the United States: Porcelain is 100/90=1.1, and wine is 120/80=1.5. China's comparative advantage lies in porcelain.

而在国际分工后：中国专门生产瓷器，分工前220个劳动时间生产1单位瓷器和1单位葡萄酒，现在220个劳动时间生产2.2单位瓷器；美国分工前170个劳动时间生产1单位瓷器和1单位葡萄酒，现在170个劳动时间生产2.125单位葡萄酒。综合中国与美国的产量，分工前中国与美国390（100+120+90+80）个劳动日共生产2单位瓷器与2单位葡萄酒，分工后390个劳动日共生产2.2单位瓷器和2.125单位葡萄酒。两国通过分工，专门生产比较成本较低的产品，可以增加世界产量；通过交换，双方都可以得到利益。

This principle tells us that any country, no matter how strong or weak its economic power is, can determine the products it has a comparative advantage in accordance with the principle of comparative advantage, arrange production, and conduct trade, so that both trading parties can use the same labor Expenditure is exchanged for a greater product than could have been obtained before the labor.

The principle of comparative advantage is the most basic theory of international trade, until today, it is still the core theory guiding the practice of international trade.Understanding the principle of comparative advantage is of great value for us to understand the benefits and reasons of trade, and for us to firmly pursue a free trade policy.

Generally speaking, China has a relatively large labor force and a relative shortage of capital at this stage. It should develop relatively labor-intensive industries, or relatively labor-intensive sections of capital-intensive industries.However, there may be tens of thousands of labor-intensive industries or relatively labor-intensive sections in capital-intensive industries. It is impossible for the resources in each place to produce all the products that meet these two conditions, so a choice must be made .

The specific selection should follow the following four principles:

One is to choose local traditional industries.For example, there is a town called Hangji in Yangzhou, which is the toothbrush capital of the whole country. If the toothbrush factory in Hangji town does not start operation, toothbrushes from all over the world will be rationed.This town has produced toothbrushes since the Daoguang period of the Qing Dynasty, and has a historical tradition.There is a town of Wengang in Nanchang, which is the national capital of stylus. 70% of the stylus produced in China come from that place. Wengang began to produce pens in the Song Dynasty, so it also has a historical tradition.

The second is the local state-owned enterprises. In the 20s, state-owned enterprises did not have comparative advantages in many industries.In the past 50 years of reform and opening up, my country’s average annual economic growth rate has been 26%, and the economic scale has increased by 9.4 times. The amount of capital and technology owned has improved a lot compared to the 10.3s. Many of them did not have comparative advantages and needed government protection subsidies. Only companies that can survive can actually be rejuvenated.Take Chongqing as an example. Chongqing used to be an old industrial base, but now it is the motorcycle production capital of the world.This is because the heavy industry bases in the past laid the foundation for many equipment industries, and the industrial clusters formed by local state-owned enterprises are now in line with my country's comparative advantages.

The third is to have unique local resources.Such as wolfberry in Ningxia, cantaloupe and raisins in Xinjiang, etc.

Fourth, the existing local industries can be extended upstream and downstream.For example, Yiwu was originally an agricultural area with basically no industry, but now there are many industries in Yiwu, such as hosiery and stationery.Because Yiwu has a market, sales can be extended to production, and the products produced are used for labor-intensive and relatively traditional technology products, which are in line with comparative advantages and combined with market experience.

[links to related words]

Comparative advantage A country has a comparative advantage in producing a product if the opportunity cost (measured by other products) of producing a product in its own country is lower than the opportunity cost of producing the product in other countries.

The international division of labor refers to the division of labor among countries in the world. It is the labor relationship formed by producers of various countries through the world market, and it is also the basis of international trade and economic relations between countries (regions).It is the product of the development of social productive forces to a certain stage, the result of social division of labor extending from domestic to international, and the trend of socialization of production to internationalization.Any country has its own comparative advantages. Exporting products with its own comparative advantages and actively participating in the international division of labor can promote economic development.

The resource endowment theory was proposed by Heckscher and Ohlin, also known as the neoclassical trade theory.In the view of Heckscher and Ohlin, the input of production factors in actual production is not just one kind of labor force, but many kinds, and the input of two production factors is the basic condition in the production process.According to the endowment theory of production factors, when the technical level of the production of the same product in each country is the same, the price difference between the two countries in the production of the same product comes from the cost difference of the product, and this cost difference comes from the production factors used in the production process. The price difference, the price difference of this production factor depends on the relative abundance of various production factors in each country, that is, the relative endowment difference. The resulting price difference leads to international trade and international division of labor.

(End of this chapter)