Research Of Financial Development And Foreign Trade On Total Factor Productivity

The total factor productivity(TFP) is believed the source of economic growth in the long term.Enhancing the efficiency of resource allocation and implementation of technological progress are important ways to the growth of TFP. The financial industry is an important support for the development of modern economy. Through the functions of absorption of savings deposits, optimizing the allocation of capital, disperse the risk of management, convenient services. Development of the financial industry can provide funds for the enterprise innovation behavior and reduce the risk of researching, thus encouraging the innovation behavior. Through developing foreign trade activities, export trade bring about the "scale economic effect" and "learning by doing effect", which can drive the technology level of export enterprises.Moreover, effect of level link and vertical link of export enterprises can help the non-export enterprises to promote technological progress. Other more, by importing advanced technical equipment, import enterprises can promote technological progress of itself. At the same time,under the competition effect, non-import enterprises will pursuit technology progress. In addition, the development of the financial industry can provide credit support for the development of foreign trade activities. Foreign trade activities can expand the scale of the market, then the scale of market will be larger and it can put forward a greater demand for external financing. Thus, the development of the financial industry will go further.Based on the review and summary of the previous literature, this paper studied the impact of financial development and foreign trade on the growth of TFP. The results show that: financial development and foreign trade have positive effects on each other. Financial scale expansion and financial deepening have positive effects on TFP growth only in eastern region.But the effects of financial scale expansion and financial deepening on TFP are not good in the middle and western region. Foreign trade can promote China’s TFP growth, but in the regional models, only eastern region reflects the effect. Finally, this paper presents the implementations such as improving the structure of import and export trade, to strengthen the financial deepening, to expand the input in education,to carry out industry transfer among regions of the east, middle and west and so on.