The Modification Of Industry Structure And Exchange Rate Arrangement

The debate on the choice of the exchange rate system turned up since from the disappearation of the metal-based system and appearance of the currency credit.After the Bretton Woods system,a fixed exchange rate system,pegged to the dollar,is absolutely in a dominant position.But with the gradual weakening of the dollar,there is a tendency to the floating exchange rate system,which leading to the exchange rate system debate.The world monetary system,under the Bretton Woods system,contains an impulse that the floating exchange rate system will replace the fixed exchange rate system.Advocates of a fixed exchange rate system are in a defensive position as an advocate for floating exchange rate system is in the attack situation.At that time,the historical condition is considered much more from macro-economic variables and the exogenous of exchange rate system in the choice of exchange rate system.At the same time,the exchange rate system under the Bretton Woods system is the most controversial in the developed countries,which the economists' viewpoints of these countries will inevitably be affected by the mainstream scholar's,and regard the countries mentioned above as the argument's example in the subconscious.In this way, on the one hand,it will led to an ignorance of the selection of the the exchange rate system in developing countries;on the other hand,because of the economic structure is similar to that of developed countries,whether it is "long-term" or "short-term," there is not a strong impact as to their choice of exchange rate system.So it is inevitable to ignore the "period" of the choice of exchange rate system.After the Jamaica system,without exception,developed market economy countries opted for a floating exchange rate system,and the vast majority of developing countries are pegged to choose a fixed exchange rate system,middle exchange rate system,and managed floating exchange rate system,or simply give up their national currencies,and directly choose the currency of a developed country as their national currency.After the Asian financial crisis in 1997,the "original sin" and "fear of floating" theory turned up."Original sin" theory thought that the "Original sin" would be the reason of the "currency mismatch" and "period Mismatch in developing countries for their choices of floating exchange rate system.But the "fear of floating "thought that,in developing countries,chose a fixed exchange rate system are the fear of "Dutch disease" and lacking of credibility of the government.Instead of saying "original sin" and "fear of floating" are explanations of the choice of developing countries;it is more like a condemnation to developing countries.There is no denying that the mainstream choice theory of the current exchange rate system applying to developing countries has a lot of unfairness.Focus on the point,the major limitations of system choose which is the mainstream of the current exchange rate system is the neglect of the varying development levels,in fact,that is the most important element when the developing countries are choosing their exchange rate system.Differences between countries in levels of development can be reflected by the industrial structure.While due to differences in the level of economic development is abstract in the conceptual,it is possible to analysis the choice by the differences of industrial structure.According to the Econometric model—"Logistic be interpreted as discrete binary variable",to give an regression analysis of the industrial structure of the exchange rate system,we can make a conclusion:there is a high correlation between the industrial structure and choice of exchange rate system;the higher industrial structure level a country is,it tends to choose Floating exchange rate system,the lower level it is,non-floating exchange rate system will be more appropriate.However,we make the conclusion according to Logistic regression analysis,but its internal mechanism is it so?According to the endogenous growth theory,analysis on the relationship between leading industries and industrial structure by Rostow,we believe that,Economic growth,changes in industrial structure and leading industries are decided by technological progress,and a high degree of upgrading the industrial structure can not be separated from the Alternating of leading industry.According to Vernon's "Product Cycle" and Akamatsu to the "Flying Geese Industrial Development Patterns",change in the leading industries around the world followed by process of the developed countries to developing countries to the developed countries.Comparative advantage theory,the specific elements model,the proportion of elements theory and economies of scale theory are the main theories to explain a country's foreign trade structure,from the Static time point to explain the structure of trade,the implied meaning is:import and export product is the carrier of a particular element and factor endowments,and in fact a country is to output and introduce specific factors and factor endowments.Flying Geese Industrial Development Patterns theory and Product Cycle theory are the main theories to connect the change of leading industries and the import and export structure,which From a dynamic point to explain the trade structure.According to integrate relatively static specific elements and dynamic change of leading industry,it revealed the complementary on the import and export product between developing and developed countries.At the same time,the market that the export product of developing countries faced in the developed markets should be a Perfect competition or similar fully competitive market.However,the market that the export commodities of developed countries faced in the developing countries should be a complete monopoly,nearly monopoly or Monopolistic competition market.Under this conditions,there is an eliminate impact on the exporters and government for developing country,so this influence will inevitable affect the choice of exchange rate.Starting from the industrial structure to analyze the choice of the exchange rate system,in other words,it is the choice of exchange rate system from the point of real economy,which directly led to neglect to the financial sectors.In the path of exchange rate system choice,the neglect of financial sector is equivalent to the neglect of the capital and financial accounts.For developing countries,capital and financial accounts being not opening up,there is no doubt that the choice of exchange rate system depends on the current account,that is,the impact of the real economy;when the capital and financial accounts been opened up,as the existence of the world's currency-based monetary and budgetary constraints,in a long period of time,capital and financial account balance is constrainted by the current account balance.In the process of Exchange rate system selection,capital and financial account in a subordinate position and the current account is in a dominant position.After making assumptions,it is assumed that there are only two extremes countries in the world,one is in the initial stage of development and another is a extremely developed country.It can be conducted from import and export products structure analysis of developing countries that the developing countries tend to choose non-free floating exchange rate system which there is much more management,and the process in developing country from non- free floating exchange rate system to free floating is decided by a high degree of narrowing the gap between the industrial structure.In one country,technological advances led to the replacement of the leading industries,in turn,which is the change of leading industries led to technical progress. The replacement of leading industries promotes the change of industrial structure,and changes in industrial structure speed up the alternating of leading industries.At the same time,the replacement of leading industries affects the structure of a country's imports and exports,and import and export structure also affects the choice of exchange rate system.In that case,it can be explained that there is a high degree of correlation between changes in industrial structure and exchange rate system,the "turning point" of changes among exchange rate system should not be defined by a "point",but a long-term and smooth process.From the history course of development and change of exchange rate system,we can see that China has always been in a dilemma,to choose efficiency or stability.So when we make the choice,we should consider the adaptation of industrial structure and exchange rate system.Through analysis of the leading industries in China,we realize that China's exports was in competitive status in the developed markets of developed countries,and developed country imported products from our ours,similar to the monopolistic status in our market.So it is a long-term strategy to choose Non-floating exchange rate system in our country.