Resource Constraints in the Dynamic Evolution of China’s Comparative Advantages

Abstract

Resources are a hot topic in the economic circles. On the one hand, resources provide a material foundation for economic development; on the other hand, due to the finiteness of resources and the infiniteness of human being’s desire to develop economy, resources can largely constrain economic development. The theory of comparative advantages indicates that countries and regions with abundant natural resources can sustain long-term economic growth relying on their comparative advantage of natural resource endowments. According to the experience of international economic development, for developing countries participating in the international division of labor and collaboration, the evolution of their industries of comparative advantages generally follows this pattern: resource-intensive industries → labor-intensive industries → capital- and technology-intensive industries. From the perspective of temporal evolution, no country or region can stay forever in comparative advantages because they evolve dynamically. Under the influence of technological progress and labor productivity, the current industries of comparative advantages may not be as such in the future. Similarly, China’s comparative advantages are also dynamically transforming. According to the materials at hand, China has already lost its comparative advantage in resources, which has become a significant constraint on China’s economic development. This chapter will first analyze the status quo of China’s comparative advantages in resources and then provide relevant literature and methods for analysis. After that, it will empirically analyze the resource constraints on and the impediments to Chinese and regional growth. Finally, it will put forward a path to realize the dynamics of the country’s comparative advantages, namely, the economic transformation of resources.