The Impact Of Diversification Of Export Products On Regional Productivity

According to traditional trade theory, specialization of trade structure is conducive to the increase of trade interests. Firstly, the theory of absolute advantage explains that specialized production can enhance the level of division of labor, improve labor productivity, and gain the benefits of trade. Secondly, the theory of comparative advantage thinks that both of the trading countries producing and exporting the products with comparative advantage can increase the overall level of welfare. Moreover, H-O theory thinks that the trading countries should be specialized in producing and exporting the products produced by their abundant elements, which can improve the efficiency of production and consumption. However, with the scholars represented by Paul R. Krugman, putting the monopolistic competition, economies of scale and product differentiation into the theory of international trade, more and more scholars began to focus on the impact of export diversification on the international trade revenue. The existing research shows that exporting more types of product can get higher growth rate, and this situation is more prominent in developing countries.This paper analyzes the diversification of export of every province in China. The research findings showed that the level of export products variety has been on the high level and the regional difference exists. That shows the difference among Regions in China. We build theoretical models, and do empirical test based on 1998-2009 provincial panel data in China. The results show that the level of export products variety does decrease TFP.Finally, we proposed some actions to enhance the export and TFP, which aims to guarantee economic growth and help China’s economic transformation and upgrading.