Substitutability Analysis of Trade in Goods and Trade in Services Balances Based on Comparative Advantage Theory

DOI

10.2991/978-94-6463-546-1_13How to use a DOI?

Keywords

trade in services and goods; differential substitutability; comparative advantage theory; trade imbalance

Abstract

It is found that there is obvious substitutability between the balance of trade in goods and services, which means countries with a surplus in services trade generally have a deficit in goods trade, while countries with a surplus in goods trade tend to have a deficit in services trade. This paper is based on the theory of comparative advantage, and joins the management of cross-border flow of factors, to further analyze the formation mechanism of trade balance substitutability. Due to the finiteness of production resources and factors, countries have differentiated comparative advantage in the production of products or factor services. By exporting goods or services with a comparative advantage and importing products or services without a comparative advantage, the overall balance of trade is finally realized. Therefore, the merchandise trade deficit is a reflection of the service trade surplus. The fundamental reason for the trade imbalance between China and the United States is the excessive focus on the merchandise trade deficit or surplus of a single country. To alleviate China’s services trade deficit, it is crucial to improve the structure of services trade and enhance the international competitiveness of the services industry.

Copyright

© 2024 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - Lin Sha
AU  - Yiqun Li
PY  - 2024
DA  - 2024/10/27
TI  - Substitutability Analysis of Trade in Goods and Trade in Services Balances Based on Comparative Advantage Theory
BT  - Proceedings of the 2024 2nd International Conference on Finance, Trade and Business Management (FTBM 2024)
PB  - Atlantis Press
SP  - 123
EP  - 128
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6463-546-1_13
DO  - 10.2991/978-94-6463-546-1_13
ID  - Sha2024
ER  -