EAIE specialisation, 2nd year
How do you think it would be relevant for a developing economy to better participate to
international trade and specialization, through the lens of the neo-factorial models?
Starting from “technological-gap account” of international trade which states the fact that
innovative products come from “innovative” countries and only after a few stages get to
developing countries, I will briefly analyse the example of China (a developing economy) in
this regard to offer a larger perspective over the subject.
Firstly, it could easily be seen that the technological gap between China and USA (the most
relevant country in respect to the comparison can be done) is still a considerable one
(microchips, space technology, internet and computer technologies, jet engine, mathematic,
physics etc.) and it started drastically to narrow. China, known for its “fast-learning” ability,
not only started to reduce the size of the gap, but raising the possibility of closing it.
Commencing with government’s spending on education around 20 percent of its budget and
the heavily investment of Chinese households reaching levels equivalent to 50 percent of the
government’s education budget, it resulted to being the country with the highest number of
students learning abroad. The most important aspect of this being the increasing ratio of these
students returning to China. All these measures endow China with not only an educated and
disciplined labour force to work with newly introduced technologies, but also with the R&D
capability, to learn and eventually innovate on top of existing tech. Even more, the Chinese
government provides generous funding for Chinese researchers to interact and collaborate
with their global counterparts. All these factors being key points in China’s evolution.
Moreover, China’s movement from medium technology capability to a high-tech one at an
accelerating speed could bring benefit to other developing countries. For more than 10 years,
we have witnessed how China commoditized computers, smartphones, modern metro
subways, and even high-speed rail. Low-income countries and social groups benefited the
most. In the future, some of the technologies enjoyed today by advanced countries — such as
smart and clean energy systems, autonomous driving cars, new energy vehicles, automation
and robotics, advanced medical equipment and medicines and so on — will become
increasingly more affordable to developing countries, a process that will be largely driven by
China. This way, China makes a huge engagement in international trade, alongside other
emerging nations which will probably develop strong international relations.
However, it is not surely known that China will become a global leader in innovation so it
can replace today’s advanced economies in trading internationally. But with these
perspectives and well-educated population, China will possibly become a true innovator in
major high-tech fields soon enough, due to its in dept-depth understanding of the
international trade and neo-factorial model.