Trade in value added for top export destinations
LU Yiping*(penner)
CUI Jiayi
LIN Shiqing
International trade among countries help improve global efficiency, which brings both
domestic and foreign value added. And different approaches to international trade theories
answer the question about with whom do countries trade.
Country-similarity theory explains the reason of trade occurs among countries in terms of
natural conditions and factor endowment properties. China has a large trade industry with
Japan and Korea, Republic of these years, which contributes to our similar natural
condition. Not only the similar consumers economic level, but also the near product
property. As the theory says, companies produce the product in response to the analogous
market condition as their own. Also, the effect of near distance lower the transportation
cost. Therefore trade among Japan and Korea to China makes 31.9% and 32.3% value
added in total gross exports respectively.
Political relationships and economic agreements theories indicate the relationship between
foreign trade and international factor mobility may discourage or encourage trade among
countries. China has the greatest trade with the United States due to the political
relationship and trade agreements which reduce the formalities and tariffs needed to cross
borders. What’s more, Chinese low labor force cost attracts many developed countries
import from China.
The theory of economic size shows that developed countries produce so much that they
have more to sell both domestically and internationally. Because of the high income,
