Percentage of exporting value to GNP in USA and the world
Notice: No data for the prediction data for the world in 2025 Resource: World Bank, World Development Indicators 1999 and WEFA Forecast, 2000 Data from: World and US forecast GDP source info
Another example is China China has dedicated her economy’s output more and period from 1978 to 2006
Resource: National Bureau of Statistics of China
It‘s clear that the world trade is more developing and more important, not only for the world economy itself but also for each country ‘s economy We can conclude that international trade is one of the most major and important driving-force for the development of the world economy and for the world advance.
To the aspect of object of world trade, we are not unable to mention to USA,China, Japan and EU These objects are the major resource of demand and supply for international trade This chart shows how these countries important to the world trade. world trade
From that chart, we see that total trade exchange value of America, China, Japan and EU accounts for 80% of world trade value while those nations population is not over 30% of the world population World trade so has its own motive-force By this time, the importance of developed countries has decreased in absolute value and relative value, especially USA The Chinese importance has increased quickly.
In 2009, China first time pass the German to become the biggest exporter of the world with the total export value reached 1200 billion USD In the same year, China has become the second world largest trading in value country There is noticeable changing in the world trade’s subject and the raising of China seems to be unpreventable
Lately, a part of people in the world is protesting the negative effect of globalization and the unification of the world economy They reckon that the world trade controlled by rich countries is the main reason of the negative effect of globalization and therefore they strongly protest against the process of liberalizing trade Typically, in the World Economic Forum in Davos on Jan 2009, protestors from many countries demonstrated to show their attitude against liberalizing trade and reckon that a liberalization trade is only giving interest to rich countries and the downtrodden result is always to the poor nations In fact, many other people agree with the demonstrators and evenly they pessimistically protest against liberalization trade
We both know that the developing countries are the poor and easy hurt nations in world trade The unreasonable economy’s structure, the out dated techniques are the major factors make them weak to the liberalizing trade.However, the deepest problem to the developed countries is their hesitance in joining in the world trade In the 50s decade, Korea, Malaysia were the poor and backward countries that had just gained the independence from the rule nations and completely not better than other developing countries The difference is that nowKorea and Malaysia has been much better than other developed countries, Korea evenly became a NIC Other developed countries are still themselves of 50 years ago and evenly falling deeper in the backward position Why? The reason is that,during the past 50 years, Korea and Malaysia took part in the world trade with great enthusiasm In the world trade that many people think it’s unfair, Korea andMalaysia tried their best to gain the great result and undoubtedly became the winners Other developed countries, or tried to keep themselves isolated, or limited their relationship with the world trade, got the failures and still be backward and wins the game, she will be able to keep face to other advanced nations
The world gives many favors to the developing countries that join in world trade Beside, the behind countries has their own advantage Many countries actually are raising and developing rapidly to escape from the poorness The list of successful countries is getting longer, not only Korea or Malaysia, now with the raising stars India, Vietnam and China
1.1.3 Trade to the development of China
In the example of the success, China is more remarkable to other countries. Before reforming in 1978, China was behind the cliff of poverty and social chaos. After 30 years, China has completely changed herself Reforming in China was considered to be very successful in the world The annual GDP grown rate is about 10% The economy scale is hundred times to 1978 Beside, Chinese trade has made miraculous steps, total export value boosted from 9.75 billion USD in 1978 up to
In order to research to the depend of Chinese GDP to export value, we use a math form, in which GDP is depend on three variables
- Total export value ( EX variable )
- Total government expenditure (GX variable )
We form up the function
With 30 observations from 1978 to 2007, we have the data table below
Year Utilized FDI (Bill.USD) Export (Bill USD) Government Expenditure GDP (Bill.USD)
(CTASC), China outlook in XXI century
Website www.ctasc.org.tw
Analyzed by Eview 4.0, we get the report:
Included observations: 25 after adjusting endpoints
Variable Coefficient Std Error t-Statistic Prob
C 2.597149173710 0.1022857481670 25.3911147961 3.02571156147e-17 LOG(GX) 0.322235876111 0.1005933692360 3.20335106138 0.004270181472940 LOG(INV) 0.321577217058 0.0257977250404 12.4653323715 3.59863361322e-11 LOG(EX) 0.292754260252 0.0947123783635 3.09098203752 0.005536826938130 R-squared 0.9961062963220 Mean dependent var 6.37453696916 Adjusted R-squared 0.9955500529400 S.D dependent var 1.15168304742 S.E of regression 0.0768263846472 Akaike info criterion -2.14889061620 Sum squared resid 0.1239481609370 Schwarz criterion -1.95387048422
Durbin-Watson stat 0.6609899266660 Prob(F-statistic) 0.00000000000
Form the report; we conclude that the form is completely appropriate
With other audits, the reports show that the math form is acceptable and no error over 5%.
From the economic aspect, we remark: variables This is reasonable to the research of economist that government expenditure has led the investment and orients the development of Chinese economy.
- Export is the most remarkable element in Chinese trade Within the past
30 years, China mostly got trade surplus thanks to high total value of exporting Therefore, export is not only an important element of trade, but also the important factor of Chinese GDP If we replace the EX with the total trade value, it’s surely that GDP depend more on this new variable.
From the result above, we conclude that the superpower form
The result is an acceptable and reasonable explanation to how GDP depends on export Because the differ between coefficients are very low while in the 30-year observations export is the most changing variable, export therefore is approximately as important as two other variable.
We know that Chinese products are very competitive, especially they are mostly much cheaper than competitor’s products The low price factor makes 80% ofChinese exporting goods and 90% of Chinese exporting items are low cost products Many people were surprised with the “Chinese price” … It is too cheap!The world is in the whirl with the raging storm of low cost Chinese goods We often heard the news of those Chinese low cost goods has finished the conquest over some market such as Vietnam, Yemen… Now, China has become “theFactory of the world” Therefore, if we can grasp Chinese experience in producing miracle China to give lessons and apply to other countries.
1.2 The Competitive Advantage of Nations Theory and Appling to China
M.Porter, full name Michael Eugene Porter, a professor of Harvard University He is one of the best known economists in the world and the father of theory “national competitive advantage" This theory is considered, used by many countries; it is very effective in practice Now, the article presents some major contents of the theory and is applied to analyze the case of China It is also adapted throughout the article to explain competitive advantage of China’ products cost which is quite cheap
"National competitive advantage" is practically a modern economic theory that originated from theory of Comparative Advantage In conditions of globalization and the unification of the world economy today, every country has become a subject of the world economy and the role of nations, Porter's perspective, becoming more important rather than diminishing When a company competes with rivals, the role of nation, as a main subject that provides advantages, environment and business conditions, will be clearer and more important Global competition make no country, no government can be a bystander Obviously if a country wants to win the competition in an individual industry, it must be aware about the advantages of it has and how to create advantages itself.
“…no nation can or will be competitive in every or even most industries.Ultimately, nations succeed in particular industries because their environment is the most forward-looking, dynamic and challenging ” individual industry
The content of this theory can be illustrated in the picture below
Four main factors make the competitive advantage of a nation including: conditions for production factors, the demand conditions, structure, strategy and competition of the companies, industries that supporting or related Additionally, two factors that promote the role and impact indirectly to national competitive advantage include: Government, the opportunities.
Wage and Labor Productivity in some countries
Resource: Annually Development Report From UNDP 1993 use the Wage/Productivity ratio to compare (W/P) Of these countries, USA is W/P=1 means acceptable ratio or the worker receives the deserving wage for what they worked Some countries like Japan, Korea and Mexico have W/P