| Comparative Advantage Rule is the basic theory of international trade. Michael·E·Porter publicized his famous trilogy, Competitive Strategy(1980), Competitive Advantage(1985), The Competitive Advantage(1990), which brought forward systematically his Competitive Advantage Theory. What is the difference between the two theories? What is the internal relation of them? And what about the relation? Some scholars believe that we should follow competitive advantage theory to develop our foreign trade. Others insist that we still take the comparative advantage rule. Firstly, this article recalls the backgrounds and the process of the two theories. Secondly it makes analysis on the two theories. Thirdly, associating with the developing clue and the connation of the two theories, the article makes a contrastive analyst between them, in order to find the inner relation of them. Finally, it focuses on the illumination brought by Diamond Model of Competitive Advantage.In the first part, it recalls the developing process of the two theories, introducing the economic backgrounds so as to make clear about the developing clue. Comparative Advantage was settled by David Richard on foundation of Adam Smith's Absolute Advantage. It can well explain the trading basis and trading profit. However, there is a defect in it, that is, the theory assumes the existence of advantage but not explains what has caused it to exist. Within this frame, the later economists explore the causes according to the economic reality.The Competitive Advantage of Nations was introduced by Michael·E·Porter, aiming to improve the industrial power of U.S.A. Porter's academic style is like that of management, which in nature is comprehensive. Different from economists' focus on price mechanism, management regards more the role of managing and strategy of companies. Porter's research is mainly in company and industry. He thinks that industry is the main competitive body in economy, and he developed a special analyst frame from the view of industries. His concept of international power of industries is: A nation's competitive advantage is whether it can create a good competitive environment and make its companies gain the competitive power. He applies a diamond model to show the factors that affect the industrial power. The model contains four main factors and two associative factors. All these factors can function individually and meanwhile affect the others. The corporative effect of the six factors is the cause where the nation's industrial power comes from.The second part is to find out the internal relationship between the two theories on the basis of the historic introduction of the first part. By contrasting, the article tries to seek their difference and sameness, and then gives the conclusion.With the development of economy, the meaning of Comparative Advantage is also deepening. The theory after Richard is a continuous perfection to the cause of comparative advantage. Porter explains the cause of industrial power with his diamond model, which is in fact the conformity and development of the factors of comparative advantage. But its analysis view is far beyond the traditional ones. The Diamond Model not only can explain the cause of industrial power, but can also predict its future power according to the changing of the comparative conditions of the six factors. Most valuably, is that it provides a whole thinking frame for a nation on how to develop its different industries.The analysis conclusion is that Richard set up the comparative rule for participating in trade and obtain maximizing welfare from it. Porter posts the cause of how the comparative advantage is formed, developed and how it can be changed. In this sense, Competitive Advantage perfects the Comparative Advantage Theory. And according to the two theories, a nation can improve its industrial power, obtain more profitable trade condition and thus achieve a maximized welfare in the long run.The third part is case analysis on Diamond Model. At first, it exp...
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