On david ricardo's Theory of Comparative Advantage

The theory of comparative advantage can be expressed as follows: the gap of labor productivity between the two countries is not equal in any commodity. For countries with absolute advantages, we should concentrate on producing goods with greater advantages, while countries with absolute disadvantages should concentrate on producing goods with less disadvantages, and then exchange them with each other through international trade, which not only saves labor, but also benefits each other. The core content of the theory of comparative advantage is "emphasizing two advantages and neglecting two disadvantages".

Generally speaking, China has a large labor force and a shortage of capital, so it should develop labor-intensive industries or labor-intensive departments in capital-intensive industries. However, there may be thousands of labor-intensive sectors in labor-intensive industries or capital-intensive industries, and it is impossible for resources in each place to produce all products that meet these two conditions, so a choice must be made.

Specific selection should follow the following four principles.

One is to choose local traditional industries. To give a few examples: Yangzhou has Hangji Town, which is the toothbrush capital of China. If the toothbrush factory in Hangji Town doesn't start, toothbrushes all over the world will be rationed. The town has a historical tradition of producing toothbrushes since Daoguang period of Qing Dynasty. There is a town of Wengang in Nanchang, which is the pen capital of China. Where does 70% of the stylus produced in China come from? Wengang has also produced pens since the Song Dynasty, so it also has a historical tradition.

Second, there are local state-owned enterprises. In 1950s, state-owned enterprises did not have comparative advantages in many industries. At that time, China was very poor. Since the reform and opening up 26 years ago, the average annual economic growth rate in China is 9.4%, and the economic scale has increased by 10.3 times. Now, the capital and technology holdings have been greatly improved compared with the 1950s. Many enterprises that have no comparative advantage and need government protection subsidies to survive can actually be revived. Take Chongqing as an example. Chongqing used to be an old industrial base, and now it is the motorcycle production capital of the world. The whole country produces10 million motorcycles every year, and Chongqing will produce more than 4 million motorcycles. This is because the heavy industry laid the foundation for many equipment industries in the past, and now the industrial clusters formed by local state-owned enterprises are in line with China's comparative advantages.

Third, the local area should have unique resources. Lycium barbarum in Ningxia and raisins in Hami, Xinjiang are unique local resources.

Fourth, the existing local industries can extend upstream and downstream. For example, Yiwu used to be an agricultural area with little industry, but now there are many industries in Yiwu, such as socks and stationery, because there is a market in Yiwu, which can extend from sales to production. The products produced are used in labor-intensive and relatively traditional products, which are in line with comparative advantages and combined with market experience.