Analysis of Impulse Response of Distortion of Factor Allocation to Foreign Trade Transformation and Upgrade

Abstract

Trade protection is the external manifestation of the macroeconomic situation, and the micro mechanism behind it is the abnormal changes in the economic factor structure and factor allocation efficiency of countries around the world. Factors are the micro and micro foundations of economic and social development. And any economic phenomenon and economic law will ultimately be attributed to the optimal combination of factors. The fundamental of the transformation and upgrading of foreign trade lies in the transformation of enterprises and the micro-foundation of economic activities --- the effective allocation of elements. China's foreign trade transformation and upgrading presents problems such as stickiness, imbalance, and path dependence. The underlying reason behind these problems is the distortion of factor allocation. In this paper, by constructing a VAR model, an impulse response analysis is carried out on the influence of the distortion of China's factor allocation on the transformation and upgrading of foreign trade. The study found that the distortion of factor allocation has a restraining effect on the optimization of China's foreign trade commodity structure, foreign trade mode structure, foreign trade main structure, foreign trade internal spatial structure, trade conditions, and the optimization of foreign trade product competitiveness.