Product Competitiveness And Exchange Rate System Selection

In the 1930 s,as the gold standard relics,debate about exchange rate regime choice with it.At first,the debate centered on exchange rate regime should choose fixed or floating,one of the most heated debate in the 50 s,60 s,walter mondale path,puts forward the theory of optimum currency areas,he thought about the choice of exchange rate regime can not directly say it's floating or fixed good choice,and should be combined with the specific economic factors for research.Before the 70 s,about the exchange rate regime choice rarely involve in the developing world,about73 collapse of the bretton woods system,most developing countries choose fixed exchange rate system,and the vast majority of developed countries choose the floating exchange rate system.After that people begin to pay close attention to the developing countries exchange rate regime choice.In the 90 s,the currency crisis is frequent,and these crisis mainly concentrated in the developing countries,the economists began to study the cause of frequent occurrence of crisis on developing countries,and formed some theories about currency exchange regime choice of developing countries such as fear of floating theory,theory of original sin,hollow,etc.Yet almost all these theory of exchange rate regime choice from developed countries,so the hard to avoid with the colour of the mainstream economics in the developed countries,in other words the theory put forward more is standing on the position of the developed countries,which are often ignored in developing countries and developed countries economic development of the huge differences between the applicability of the questionable for developing countries.Between developing countries and developed countries of the differences of the development of an important reason is that technological progress is different,according to Vernon's product life cycle theory,the technology spread to other countries is produced by the country needs a process,which creates a technology in the distribution of differences among various countries.By the new classical economic model,the technological progress of difference will lead to the development of thehuge differences between countries.In addition,the differences in the levels of technology will lead to different countries product competitiveness,usually with the advantage of technology national price of their products has strong intervention,in other words,at the time of exchange rate volatility,the export sector income is relatively stable;For countries at a technical disadvantage,the exchange rate volatility often leads to a giant fluctuations of its export earnings,the export sector has had a huge impact.Technology usually originated in developed countries,however,one of the main reason is that technological progress depends on the research and development,research and development needs huge investment,developing countries often cannot meet the demand of research and development funds,developed countries are flush with cash.Also because of the social system as the developed countries in the aspect of property rights(ipr)protection tend to do better than developing countries,the spread of technology in the developed countries tend to be faster than spread to developing countries.So the technical level is generally lower than developing countries in developing countries,thus product competitiveness level is generally higher than that of developing countries in the developed countries.At present,most of the developing countries of a floating exchange rate system,or a fixed composition at a higher exchange rate system,and in most developed countries is a floating exchange rate system.So this article from the perspective of product competitiveness to study of exchange rate regime choice and exchange rate system using a 0-1 assignment,product competitiveness proxy variables exported finished products of high technology products accounted for replacement.After the screening,selection of 16 years from 2000 to 2015 in 67 countries of panel data to construct panel logit,results show that the product competitiveness and there is a positive relationship between exchange rate system,that is,the stronger competitiveness of products,the more inclined to choose the ingredients at a higher exchange rate system,on the contrary,the weaker competitiveness of products,the more tend to a fixed composition at a higher exchange rate system.Which are in conformity with the article forecasts the conclusion.No points,exchange rate system a country to choose what kind of exchange rate regime depends on its economy,so this paper combined with China's national conditions related Suggestions are given.With the development of economy,China up to now mainly through two major revaluation,one is 94 yuan,based on the market,choose peg to the dollar;One is 05 revaluation,peg to the dollar is pegged to a basket of currencies.Can change in a trend that is floating component increases,so for China,promote the competitiveness of the products is to ensure that the correct move smoothly to choose,and to promote the competitiveness of the products of technology import first;Secondly encourage innovation,increase investment in research and development,clear property rights,the protection of innovation;Once again increase investment in basic scientific research,enhance the level of education,etc.In addition,the stable price level,optimize the industrial structure,improve financial structure,keep enough foreign exchange reserves and guarantee the conditions of the exchange rate reform smoothly.