Impact Of Institutiona On Regional Exports Dual Margin

Studying international trade happen, change from institution angle is a new proposition in recent years. Institution, as formal or informal social rules, is the outside will of people. It plays an extremely important role in economic development and international trade, and this effect has already been confirmed and there are more and more empirical evidence verifying it now. The existing literature have shown that:institution can affect economic productivity, control moral hazard, reduce trade transaction costs, and good institution can also encourage innovation and attract high-quality resources to help obtain comparative advantage.Mostly empirical analyses hitherto have focused on the role of institutions in international trade from national levels and concluded that good institutions lead to economic development, help to carry out international trade. Research on institutional factors impact a country’s international trade from regional levels is very rare. In view of this, this paper attempts to analyze China huge regional gap in international trade from the perspective of institutions.More than thirty years of reform and opening up, China’s economic development has made remarkable achievements:in2007, China surpassed Germany becoming the world’s third largest economy; in2010, China’s GDP overtook Japan and became the second largest economy after the United States. In30years, China’s GDP grew by more than one hundred and fifty times.However, since at the beginning of reform and opening up, China implemented non-balanced development strategy, and the eastern provinces, with its prime location, have become the forefront of China’s opening up and enjoyed a series of preferential policies to support their development. With the full implementation of reform and opening up and the socialist market economic system gradually established, Guangdong, Fujian were approved to implement "special policies and flexible treatment" in foreign economic activity, Shenzhen, Zhuhai, Xiamen, Shantou were set as special economic zone, the eastern area grabbed the pot of gold for its economic development from China’s reform and opening trials and accumulated rich experiences of developing economy. Its economic development thus laid a solid foundation. Preferential policies granted eastern provinces opportunities to take the lead in development, and rapidly transformed into productive forces through high level of urbanization, opening up, infrastructure construction, as well as marketization, improved the institutional environment of the eastern region as a whole, prompted its economic thrive, and the international trade also expanded. The huge gap between central region, Western and Eastern regions also laid the foundation in this period, and even now the central and western regions, with substantial economic output, also have the ability to carry out international trade, the gap from the eastern region has become an indisputable fact. For central and western regions, there is great distance to catch up the economy of the eastern region. It can be seen, the role of institutional factors on regional economic development should not be overlooked.This study will try to quantify institution of China’s three regions, adopt quantitative and qualitative method, make full use of macroeconomic data to analyses the effects institutional factors worked on three regional exports dual margin, which will help to explore how different institutional factors play different roles in extensive margin and in intensive margin, hoping to provide some reference advice on narrowing the development gap among the regional international trade and upgrade the industrial structure.This paper covers five chapters. The introduction part contains the introduction of background explanation, putting forward the content and significance of this study, and then review issues related to domestic and foreign scholars for research results, finally introduce ideas of this study, frame structure, difficulties and innovations. The second chapter is a research review on dual and institution, concluding definition of dual margin, literature from domestic and foreign scholars on dual margin, method to quantify and select institution indicators. The third chapter analyses the way institution affect export. It covers theoretical model of institution affecting export dual margin and some empirical study verifying it, from which we know the latest development in relevant aspects and the theoretical models often been used in empirical study, based on that, we describe the export status and institution status of three regions and find the relationship of the institution level and export level between regions, which pave the way for analyzing the relationship between the institution and exports in Chapter IV empirically. The fourth chapter is the empirical analysis section. We use fixed-effects regression(FE) as the estimation method, then choose GMM panel method to weaken endogenousness between interpretation variables and interpreted variables. Based on empirical results, Chapter V concludes this paper:for the three regions, various constituent elements of institution should to be improved in order to increase the export volume; in addition, all levels of governments should also focus on improving per capita level of education and the urbanization level; for the eastern region, improving the level of infrastructure is the priority to boost the international trade. This chapter concludes with proposals put and points out deficiencies and prospect research.