Technology, factor endowments, and China's agricultural foreign trade: a neoclassical approach

Abstract

PurposeThe purpose of this paper is to explain the determination of China's agricultural foreign trade pattern since the World Trade Organization (WTO) accession.Design/methodology/approachThe neoclassical trade theory indicates that differences in both technology levels and factor endowments can explain the international trade pattern. In terms of a neoclassical framework based on the restricted profit function, this paper employs the province‐level panel data to investigate whether China's agricultural foreign trade pattern is consistent with the neoclassical explanation.FindingsThe findings indicate that China's agricultural foreign trade pattern is evidently characterized by regional specific features. In the eastern region, agricultural foreign trade pattern is jointly determined by differences in technology levels and factor endowments. Agricultural foreign trade patterns are driven in the central and western regions by land and capital endowments, respectively. The findings also imply that the utilization of comparative advantage in China's agriculture needs to be exploited further.Originality/valueAs far as the author knows, this paper is the first to apply the neoclassical framework based on the restricted profit function and employ the province‐level panel data to investigate the determination of China's agricultural foreign trade pattern.