A Study On The Relationship Of Financial Development And Exporting Structure

Based on the traditional theory of international trade, the difference of resourceendowment between two countries as well as of technology constitute the comparativeadvantage of a country. When there is no difference between countries in resourceendowment and technology, the difference of financing cost will impact thecomparative advantage of a country. The comparative advantage determines thedivision of labor status in the international trade of a country through resourcereconfiguration, which influences a country’s foreign trade structure. The level offinancial development as a kind of comparative advantage, also can promote the tradestructure optimization and adjustment. The financial development has importantsignificance on the division and production mode as well as the adjustment of theexport trade structure.According to the principle of comparative advantage theory, China mainlyexports labor-intensive products, but the exporting growth of capital and technologyintensive products is relatively slow. At the same time, the production technology oftraditional labor-intensive industry is short of innovation, which causes China tolimit in the traditional industry of comparative advantage and hardly transform thepresent trade pattern. How to promote the trade structure and seek the newcomparative advantage have been become to a big difficult problem which “made inChina” faces. After the crisis, the exportation structure adjustment and optimizationunder the condition of external demand weakening will be an important factor in therealization of the Chinese economy transformation. With the deepening of economicsystem reformation, China has made remarkable achievements of financialdevelopment. Financial reform has continued to deepen and financial system hasbeen gradually perfect. Financial tools have been increasingly rich, and also the breadth and depth of financial markets have been increased. However, China’sfinancial development is relatively lagging behind compared to the tradedevelopment. Under the background of economic transformation, promoting thelevel of financial development has important meanings on the adjustment of exporttrade structure. Therefore, China’s financial market reformation will become a vitalpart of the export structure adjustment process.Based on the thinking above, in this article author first takes a preliminarydiscussion on the relation between financial development and trade structure of themajor trading nations of the world and get a general conclusion, which is no matter theoverall level of financial development or financial intermediary or financial marketdevelopment level has significantly positive influence on a country’s export structure.At the same time, from the point of relationship between financial structure and exportstructure, financial structure dominated by financial market is more conducive to thetransformation and upgrading of a country’s export structure.Secondly, in this paper, author has made some concluding based of the previousscholars’ related theoretical research, and made relative modification and expansionwhich consider that raising the level of financial development would helpcapital-intensive products’ export increase. The promoting of financial systemefficiency and quality leads to a decline in relative price of capital-intensive productsand a increase in production, while a rise in the relative price of labor-intensiveproducts and a decline in output. Under the opening condition, it becomes to anincrease in export of capital-intensive products and a decline in the export oflabor-intensive products. Therefore, raising the level of financial development couldincrease the proportion of capital-intensive products in export trade and optimize theeffect of the export trade structure.The third, on the basis of the theoretical model, author selects different empiricalmethods to test the conclusion by constructing the financial development level and theexport trade structure measures and get the corresponding conclusions. In chapter Ⅳ,author investigates the impact of financial development on export trade structure using static panels and dynamic panel data model of generalized moment estimation methodrespectively. The result shows that the financial development endogenous problem ofthe impact on the export structure couldn’t be ignored and also we need to consider thesignificance of financial structure when author talk about the effect of financialdevelopment. Financial development has a significant influence on a country’s exportstructure, and the improvement of a country’s financial development level on exportstructure adjustment and upgrade has a positive effect, and the impact of financialdevelopment on export structure has endogenous; A country’s financial structure alsohas a significant effect on its capital-intensive products export, the financial structuredominated by financial intermediaries exists inhibitory effect on capital-intensiveproducts exports, while the financial structure dominated by financial markets canpromote the export of capital-intensive products. Therefore, in the process of thetransformation and upgrade of a country’s export structure, endogenous problems andthe relative development of financial intermediation and financial market will have abig difference.In chapter Ⅴ, author tests the impact of each financial development indicators oneach level of export structure using the panel VAR model. The result shows that thecurrent financing model of China’s export enterprises is meanly financial intermediary.The development of financial intermediation is the most beneficial to the developmentof export structure of low level, but not conducive to China’s export structure from lowlevel to high level development. At the same time, this kind of financing modeldetermines that the impact of financial market on China’s export structure was notsignificant. Is the relationship between financial development and economic growth,the development of financial markets made more advantageous to the steadydevelopment of economic growth.In chapter Ⅵ, author concludes that the influence of financial development onexport trade structure exists threshold effect through the threshold panel data model.Author made focuses on the relationship between the development of the stock market,financial intermediaries, financial development and financial structure and low, medium and high level structure of export trade and the overall level of export tradestructure. Author selected GDP growth, GDP and GDP per capita of partners as thethreshold variables of the model to estimate. Stock market development, financialintermediary development, financial development and financial structure have positiveeffect on export trade structure overall. For the low, medium and high level structureof export trade, the above four types of financial development indexes have significantpositive influence on high level of export trade structure and have a significantnegative impact on the low level of export trade structure and have uncertain impact onthe middle level of export trade structure. This shows that financial development canpromote the export trade structure transform from junior to senior and is advantageousto the export trade structure adjustment and upgrade.In this paper, it is concluded that raising the level of financial development canimprove a country’s trade structure which shows a new train of thought for China’sforeign trade structure adjustment and transformation, which is paying attention to theimportant role of financial development. Deepening reform of the financial system andpreventing the excessive expansion of virtual economy, avoiding deviating from thereal economy needs and making the optimization efficiency of financial resourceallocation as a fundamental goal of the construction of the financial system, make surethat financial development can better support the development of the real economy.Financial reform is an important content of China’s economic reforms. GuidingChina’s economy transition with financial system reform, and promoting from rapidgrowth to stable economic development are important goals of China’s economicdevelopment in the future. China’s existing financial system is dominated by indirectfinancing which can quickly gather a large number of social capitals, but the financialsystem formed under the traditional economic development mode is difficult to meetthe requirements of current economic transformation. So in the long term, the currentfinancial system would be very unfavorable to the development of the real economy,and realize a drag on the economy transition.With the deepening of the national12th five-year plan, China has already entered the acceleration of economic restructuring and change of the pattern of economicdevelopment orbit, which means that transformation has become the major issues ofthe current national development. The financial transformation is imperative.Establishing and perfecting the financial system, in order to better serve the economictransformation, is the primary goal of the current China’s financial development. Withthe adjustment of China’s economic development pattern, China’s future growth willslowly down, the interest rate marketing reform advancement will prompt bankingprofit growth to return to normal levels. Therefore, the banking industry in the serviceof the adjustment of the economic institutions must speed up its own strategicadjustment and transformation at the same time, upholding the concept of service forthe real economy, optimizing the credit structure, vigorously developing small microfinance, financial community, green finance business, consumer finance and othercharacteristics by different development supporting and promoting China’s economicstructure adjustment and economic transformation.