Capital Intensity,Productivity Indexes And Firms' Export Decision

Firms' export behavior and motivation is the core issue of the New-new trade theory focuses on.While the majority of empirical tests made by overseas study support the “self-selection” hypothesis,that is to say,trade guides enterprises with high productivity to enter the foreign market,lower productivity firms only supply the domestic market,and the lowest ones eventually withdraw from the market.However,when scholars at home and abroad using different productivity indicators,empirical test methods,and selecting different perspectives of firms' heterogeneity to make empirical study on Chinese manufacturing companies,their results are not exactly the same thing: Some support this hypothesis,while others have produced results of the “paradox of self-selection”(also known as the “paradox of productivity”).Furthermore,research literature those supports the latter are in the majority,from which have led to a series of related search on the cause of paradox.This article suggests that Labor productivity is a type of productivity index directly depends on capital intensity,while Total factor productivity is indirectly reflected by it,and they affect firms' export decision respectively through production cost and technology innovation channels.Based on unbalanced panel data of Zhejiang enterprises over the period of 2005-2007 combined with capital intensity,we adopt a dynamic Probit model to test export decisions of manufacturing firms in China in the case of using different productivity indexes.It finds that: For those developing countries with relatively abundant labor resources,(1)the capital intensity difference is insignificant between capital-intensive enterprises and labor-intensive enterprises,cost factor still plays the leading role in two types of firms' export decision,and it is more likely to reach a conclusion of “Productivity Paradox” using Labor productivity index;(2)when there is a relatively larger difference in capital intensity between two types of firms,selecting extreme value enterprises for instance,Total factor productivity index tend to lead to “Productivity Paradox” for extreme labor-intensive enterprises,in addition,affected by capital's poor quality and low quantity,technology innovation factor that is reflected by Total factor productivity could not obviously improve extreme capital-intensive firms' export participation either;(3)capital intensity also has an impact on firms' export participating decision in terms of firms' ability to pay wages,hire highly skilled workforce,innovative new products and so on.Finally,combined with the existent problems and characteristics of Chinese laborintensive enterprises and capital-intensive enterprises,some suggestions on improving firms' export intention,upgrading the industrial structure and further promoting export trade in China are proposed.