The Research On Trade Liberalization,Expon Decision Of Heterogeneous Firm And Export Product Quality Upgrading

Since the reform and opening up, China’s foreign trade has made remarkable achievements. At present, China is the world’s second-largest trading nation, the largest goods trading nation and the largest exporter. At the same time of rapid growth in trade volume, foreign trade enterprises also increased from the initial 10 to over 300,000 in 2013. The great achievements in foreign trade of China was due to trade liberalization reforms which began in the 1990s, to reduce tariff and non-tariff barriers. However, the growth of high speed does not mean the growth of high quality and high efficiency. Overall, the current rapid growth of China’s foreign trade is still mainly dependent on the expansion of scale and quantity, but ignored the improvement in the quality of export products. With China’s rising dependence on foreign trade after joining WTO, quality upgrading of China’s exports have got more and more attention. So, since joining the WTO in 2001, what’s the effect of trade liberalization on exports decision and product quality of Chinese manufacturing enterprises? Export product quality tend to rise or fall during this period? Is there a mutual influence between export decisions and product quality? This paper will explore these issues.As the micro-body of economic operation, enterprise is a direct participant in the country’s foreign trade. Compared with the direct study on macroeconomic, analysis on the behavior of micro-enterprises are equally important. The Heterogeneous Firm Trade Theory began in 2003 provided a theoretical basis for international trade research in micro-enterprise level. The Heterogeneous Firm Theory expanded the assumption of "homogeneous enterprise", to explore the reasons and consequences of international trade from the perspective of the enterprise heterogeneity. However, due to the assumption of single productivity heterogeneity and CES utility function, Melitz (2003) model can not explain all behavior of enterprises, needing to be further improved and extended. The introduction of quality heterogeneity is one way to extend the model, the quality of export products has gradually become a new cutting-edge research subject in the field of new trade theory in recent years.Based on the above theoretical development and practical background, this paper attempts to analyze the effect mechanisms of trade liberalization on export decision and product quality, as well as the interaction mechanism between export decisions and product quality and make the empirical test using Chinese industrial enterprises database and custom micro database. The basic structure and main contents are as follows. Chapter 1 is an introduction, mainly on the research background, significance, methods and main innovations. Chapter 2 is a literature review, focus on three main aspects. First, the relevant theoretical and empirical research of Heterogeneous Firm Trade Theory, the second is the effects of trade liberalization on heterogeneous enterprise and the third is the relevant research of export product quality. Chapter 3 is a measurement and analysis of Chinese trade liberalization, export decisions and product quality, including the measure of Chinese trade liberalization in industry level using WTO tariff data, the measure of export participation and intensity in enterprise level using Chinese industrial enterprises data, and the measure of export product quality in product level using Chinese customs data. Chapter 4 is the effect of trade liberalization on export decisions, constructed a theoretical model from Bernard and Jensen (2004), and made a empirical test using 2001-2007 data. Chapter 5 is the effect of trade liberalization on export product quality, explored the nonlinear effect mechanism of trade liberalization on product quality using ABGHP (2009) model, and made a empirical test. Chapter 6 is the interaction between product quality and export decision, constructed a theoretical model from Hallak and Sivadasan (2009), and made a empirical test on "Self-selection" and "Learning by Exporting". Chapter 7 is the conclusions, recommendations and research prospects.By theoretical and empirical analysis, micro and meso-level analysis, comparative analysis, and comprehensive use of various econometric methods, this paper draws the following conclusions:First, trade liberalization has a significant promoting effect on export participation and intensity; from the ownership perspective, foreign enterprises are more affected by tariff reduction, that is, export decisions of foreign enterprises are more sensitive to changes in tariff; from the factor intensity perspective, labor- intensive enterprises are more affected by trade liberalization; from the trade pattern perspective, tariff reduction only has a weak impact on export intensity of processing trade enterprises, but has a greater impact on export intensity of ordinary trade enterprises.Second, trade liberalization has a positive effect on product quality upgrading which near the world quality frontier, namely, "to avoid the competition effect", but has a negative effect on product quality upgrading which away from the world quality frontier, namely, "discouraged effect"; from the ownership perspective, the effect of tariff reduction on state-owned enterprises is not obvious; from the factor intensity perspective, capital-intensive enterprises are more affected by "to avoid the competition effect"; from the trade pattern perspective, the effect of tariff reduction on processing enterprises is relatively weak; among other control variables, R & D investment is the most important positive factors.Third, the increase of export intensity will promote product quality upgrading, that is, there is a significant "Learning by Exporting" effect; the effect of product quality upgrading on export intensity is not significant, that is, "Self-selection" effect is not obvious; from the different quality level group, the "Self-selection" effect of high-quality group is significantly positive, low-quality group is not significant, "Learning by Exporting" effect of high-quality group is the most significant, and as the quality level gradually reduced, this "Learning by Exporting" effect gradually weakened; from the different export intensity group, the "Self-selection" effect is not significant in all groups, while the "Learning by Exporting" effect in low-intensity group is significant.Relative to the existing literature, this paper attempts to explore in the following areas:First, this paper attempts to systematically explore the effect mechanisms of trade liberalization on export from the micro-level in the framework of Heterogeneous Firm Trade Theory, including the impact on exports decision and product quality. When discussing the impact of trade liberalization on product quality, introduced ABGHP (2009) competitive effects model to explore the nonlinear effect of market opening on technology innovation and quality upgrading of incumbent firms, enrich and expand the content and research perspective of Heterogeneous Firm Trade Theory.Second, this paper attempts to establish a econometric model to test the non-linear effect of trade liberalization on export product quality, then make a empirical test using highly detailed tariff indicators in industry level and product quality indicators in enterprise level. In the literature that study the effect of trade liberalization, we have not found domestic empirical research on the impact of trade liberalization on China’s export product quality.Third, the paper uses a large sample of data from Chinese industrial enterprises database and custom database, initially test the "Self-selection" and "Learning by Exporting" effect between export decision and product quality, that is, whether a higher level of product quality company will choose to export or expand exports, whether in turn company’s export participation or expansion will upgrade its product quality. Many domestic scholars tested the "Self-selection" and "Learning by Exporting" effect between export decision and productivity, how about when we integrated the quality heterogeneity into the multiple heterogeneity of enterprise? We did not find this kind of literature, this paper conducted a preliminary attempt.