The Influence Of Home Market Effect On Chinese Export

The home market effect means that under the condition of increasing returns to scale and imperfect competition,the expansion of the domestic market demand for a commodity will bring about the export of such commodities.As a result,this commodity becomes a new comparative advantage of a country.Since it is proposed by Krugman(1980),the following scholars has expanded this theory in many aspects.The Belt and Road Initiative has attracted much attention since its introduction.This initiative can not only promote the economic and trade development between China and the countries along the route,but also provide new objects for the study of home market effects.This article uses the trade panel data between China and 36 countries alone the Belt and Road from 2007 to 2016.Using the gravity model,this paper examines the home market effect of the trade overall and 10 categories in SITC and explore its impact on China's foreign trade.It also examines the situation in different zones along the route.The results are as following:Firstly,there is no home market effect in the examination of the total trade.Secondly,3 types of SITC 0-9 commodities have home market effects.They are Category 5,Category 7 and Category 9,which are mainly industrial manufactured goods.Thirdly,in this examination,the coefficients of category 2,category 6 and category 8 are obviously less than 0,which means the home market effect doesn't exist.Fourthly,the home market effect has obvious geographical difference.There is home market effect in Central Asia and Southeast Asia,but reverse home market effect in South Asia,East Asia and Central and Eastern Europe.The home market effect has become a comparative advantage in China's trade with countries along the Belt and Road.We should make full use of this new comparative advantage to promote trade.