| Trade and international specialization take place within certain geographic space, they are constrained by certain geographical environments. However the impact of geographic factors is often ignored during the development of theories of trade and international specialization in the long run. There are two reasons for this scenario. Firstly, along with the technical progress and traffic improvement in modern time, it is generally believed that the impact on trade and the international specialization of geography is no longer important. Secondly, the traditional theories of trade and international specialization are mainly based on static equilibrium analysis and under the frame of complete free market competition, the factor of geographical differences of one country’s is not fully considered. No matter what reason, the overlook of the geographic factor in traditional researches is a noteworthy phenomenon. In recent decades, as the development of New Trade Theory, New Economic Geography, etc., geographical factors are revalued in the relevant researches and the research in this field has become a frontier.On the basis of summarizing the development of current theories, this paper discusses what role the geographical factors play in trade and new International Specialization’s formation with the new perspective of geography. The main contents and conclusions are as follows.First, geography and trade growth. As to the influence mechanism, geographical factors constitute one country’s locational comparative advantage which affect the cost of a country’s access to international market, thus play a role in trade growth. This paper founds that this mechanism in current conditions remains significant through empirical test. Controlling for other factors, trade policy only explains 21.9 percent of countries’variation on trade growth, however geographic factors explain 53.9 percent of the variation. The countries at the vicinity of international economic center or sea are more likely to have a faster trade growth.Second, geography and trade product quality. Traditional trade theory assumes the homogeneity of the product, in reality products vary in quality. By building the heterogeneous trade model factoring in geographical distance and product quality, this paper presents the theoretical mechanism about how the geographical distance affects the quality of trade products. The geographical distance causes trade cost and thus influences a company’s export decision-making. Companies with higher innovation efficiency tend to export higher quality product to farther market. This paper founds that on the global level, companys tend to export high quality product into further market, and Chinese companys do in the opposite way.Third, geography and trade policy. Traditional trade theory assumes geography as exogenous variable, this paper loosens this premise. Geographical location has an influence on trade policy, under the interaction of market competition at corporate level and tariff competition at government level. Countries with proximity of geographical location are more likely to form open trade policy to each other. This conclusion partly explains the phenomenon of the deepening trend of territorial integration in today’s term. Taking the tariff as a proxy variable, this paper explores this issue empirically. The result demonstrates that the one country’s geographical location, sea-adjacency condition, ethnic and linguistic diversity and other factors play roles on the openness of its foreign trade policy.Fourth, geography and the formation of new International Specialization. This paper summarizes the typical geographical characteristics of the new International Specialization and attributes these to the geography’s influence. In this paper, the theoretical mechanism of how the geography impacts the new international specialization is raised, mainly by three effects, namely cost effect, synergy effect and lock-in effect. On the one hand, in new International Specialization, transportation costs become explicit due to the production fragmentation, and at the same time there are higher requirements of fast delivery and production synergy. Multinationals tend to build product network within a territory or in adjacent areas to meet these changes. On the other hand, factors of production once agglomerate in a certain place with better initial geographical conditions, it is expected to create advantage of economy of scale and self-reinforcing function of the production network afterwards.Fifth, the trend of geography’s impact on new International Specialization. The empirical research in this paper shows that geographical factors affect new International Specialization, and this effect keeps a strengthening trend. The regressions across sectors illustrate there exist differences in the effect of geography on new International Specialization on sector’s level. The higher the sector’s technological property is, the stronger the effect will be. On the basis of empirical study, this paper points out that the supporting foundation of new International Specialization has been changing, the factor endowment effect has begun to decline and the role of locational comparative advantage has been strengthened.For the policy implications, this paper points out that China’s foreign trade is facing an entirely new inside and outside environments, it is needed to strengthen the top-level design and have a new thinking as for trade policy. The main policy suggestions are as follows. During the formulation of opening policy, China should have global geographical vision and mainly implement the opening strategy around One Pole Two Wings. China should reshape the locational comparative advantage by construction of One Belt One Road. Infrastructure should be emphasized to foster the interconnection between China and the relevant countries and within China’s different interior regions. Finally China should sufficiently consider the agglomeration effect and the industrial heterogeneity when it comes to plan industrial layout. |
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