Research On The Effects Of Financial Development On Export Sophistication Of China's High-tech Industry

Export sophistication,which reflects the technological capability and productivity embodied in export products,presents a new perspective to analyze global trade.It has been of a great interest and attracted widespread attention in the past five years.Some studies highlight that apart from factor endowments such as labor force,capital and technology difference,financial development is also a potential key source that determines comparative advantage and export sophistication Under the background of new normal international economy,to boost the scale and power of China's high-tech industry is the crucial link for China to transform from quantity-characterized trade country to a strong trading power that relays on innovations and quality-lead competition.Consequently,the issue about how financial development exerts influences on export sophistication of high-tech industry in provincial level is of utmost importance.It is also a high value to fulfill the regional development,bridge regional differences and economy transformation.It aims to analyze four issues as followings:firstly,via what mechanism that finance impacts on export sophistication;secondly,what's new about China's financial development and export sophistication of high-tech industry;thirdly,how does financial development affects China's high-tech industry;lastly,how to boost export sophistication of high-tech industry in China with the help of financial development.Then,on the basis of five detailed functions of financial development theory,we establish the interplay between financial development and export sophistication via capital accumulation and financing incentives mechanism.Meanwhile,we deepen the understanding of the underlying mechanism by developing a mathematical model and come up with four propositions.And six indices are used to proxy Chinese financial development in terms of scale,structure and efficiency,which relies on data for 30 provinces(excluding Tibet)in China covering the period from 2003 to 2012.The result indicates huge regional disparities of financial development within China,and the difference is widening.Thirdly,based on the measurement of export sophistication,which is initially introduced by Hausmann(2007),we calculate high-tech industry's technological capacity in cross-provincial level.It shows that eastern areas remain much more technologically sophisticated than middle-west regions in China while middle-west regions are very potential to improve its export sophistication.The empirical analysis is conducted with static panel model in both national and cross-province level.The findings are as follows:firstly,financial scale positively improves upon high-tech's export sophistication and particularly,the ratio of long-term bank loans on export sophistication works in a more robustly role.Both financial structure and efficiency negatively influences export sophistication.Secondly,in comparison with middle-west areas,the coefficients in east region model are more similar to the national model.And effects of financial development on export sophistication vary in different regions.More specifically,middle-west areas rely more on bank loans and are more negatively influenced by financial efficiency while east region counts more on stock market to obtain financings.Furthermore,to realize potential development of high-tech industry in middle-west areas,efforts should be done to improve skilled labor force,R&D input and infrastructures construction.It is also expected that spillovers of FDI inflows and processing trades can take the existing high-tech industry's export sophistication to a higher level.