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China's trade reform: Verdoorn's Law married to Adam Smith's "vent for surplus" principle

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  • INGRID H. RIMA

Abstract

The premise is that, as a member of the World Trade Organization, China's industrial trade practices are consistent with the principle of specialization in accordance with the principle of comparative advantage. Yet the trade reforms that were undertaken since the end of the Cultural Revolution (1976) have made direct foreign and joint investment primary vehicles for promoting export-centered industries that have become increasingly capital-intensive rather than labor-intensive. This paper argues that these reforms reflect policy initiatives that are more consistent with Verdoorn's Law and Adam Smith's "vent for surplus" principle than with the efficiency principles of conventional Ricardo-Heckscher-Ohlin trade theory.

Suggested Citation

  • Ingrid H. Rima, 2004. "China's trade reform: Verdoorn's Law married to Adam Smith's "vent for surplus" principle," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 26(4), pages 729-744.
  • Handle: RePEc:mes:postke:v:26:y:2004:i:4:p:729-744
    DOI: 10.1080/01603477.2004.11051409
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    Cited by:

    1. Faria, João Ricardo & Mollick, André Varella & Albuquerque, Pedro H. & León-Ledesma, Miguel A., 2009. "The effect of oil price on China's exports," China Economic Review, Elsevier, vol. 20(4), pages 793-805, December.
    2. Álvaro Martín Moreno Rivas, 2008. "Las leyes del desarrollo económico endógeno de Kaldor: el caso colombiano," Revista de Economía Institucional, Universidad Externado de Colombia - Facultad de Economía, vol. 10(18), pages 129-147, January-J.
    3. Ricardo Bonilla González & Jorge Iván González, 2006. "Bien-estar y macroeconomía 2002-2006: el crecimiento inequitativo no es sostenible," PUBLICACIONES - CID 002064, UN - RCE - CID.
    4. Joao Ricardo Faria & Andre Varella Mollick & Pedro H. Albuquerque & Miguel Leon-Ledesma, 2008. "China's Exports and the Oil Price," Studies in Economics 0812, School of Economics, University of Kent.

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