The Productivity Paradox Of Export Manufacture Enterprises In China And Theoretical Explanation

Heterogeneous firm trade theory is a frontier field of international trade theory. In this theory, researchers mainly study the mechanism of firm export with the perspective of productivity and suggest that productivity is the most important factor to influence firm export or not. Firm with high productivity will select to export as a result of it could obtain profit in the export market. Researchers often think that productivity of export firms always higher than non-exporters in heterogeneous firm trade theory and the proposition has been supported by some empirical studies. However, some researchers obtain a different conclusion which the average productivity of exporters is lower than non-exporters in some empirical studies with Chinese enterprises data. Some scholars call that export firms of China have "productivity paradox".This paper describes the developing process of international trade theory firstly. Then review the researches about the "productivity paradox" of export firms of China. Scholars don’t get an identical consensus for the existence of the "productivity paradox" of Chinese export enterprises. This paper tests the existence of "productivity paradox" of Chinese export enterprises by using manufacturing enterprises sample of Chinese Industrial Enterprise Database from2005to2008. It makes these tests according to the difference of industries one by one year. This paper also calculates three forms of firm productivity as Approximate Labor Productivity (LTFP), Approximate Total Factor Productivity (ATFP) and Relative Total Factor Productivity (Ln_TFP). It suggests as follows:Export firms in some industries have "productivity paradox" by using these three productivities although there is few difference of the existence of "productivity paradox" by using three forms of productivity. The quantity of industry which export enterprises have "productivity paradox" becomes more and more with time lasting. There is a significant positive correlation between firm productivity and export dummy in the fixed effect regression of unbalanced panel data. Hence, we could conclude that the effect of productivity on export is positive which conforms to heterogeneous firm trade theory. As a result, seeking the reasons for the "productivity paradox" of Chinese export enterprises should on condition that the effect of productivity on export is positive in theoretical research.This paper then analyze the reasons for the "productivity paradox" of Chinese export enterprises in the theoretical study after have got the existence of the "productivity paradox" in empirical tests. It suggests by using the framework of heterogeneous firm trade model as follows:some firms only entry to domestic market because export entry restrictions, although they could gain profit in export market by consider their productivity. Thus, productivity is a necessary condition but not sufficient condition of firm export. In addition, some firms are only a part of production chain for some international Multi-National Corporation. In the strategy of Multi-National Corporation, These firms always export their product although they could not obtain profit in export market. In the two assumptions, the main value of exporters’ productivity must not higher than non-exporters. If the main value of exporters’productivity may lower than non-exporters, we could call that export enterprises have "productivity paradox". Notably, the tow reasons for "productivity paradox" of Chinese export enterprises, export entry restrictions and strategy of Multi-National Corporation, seeking in this paper is according to the proposition of productivity promote firm to export. The theoretical study, analyze the reasons for the "productivity paradox" of Chinese export enterprises, in this paper is also a development of heterogeneous firm trade model.In a word, the "productivity paradox" of Chinese export enterprises is existent in the empirical tests by using manufacturing enterprises sample of Chinese Industrial Enterprise Database. Then this paper suggests that export entry restrictions and strategy of Multi-National Corporation may be the reasons for the "productivity paradox" of Chinese export enterprises in theoretical study which using the framework of heterogeneous firm trade model.