Intermediate Trade Liberalization,Product Diversification And Enterprise Markups

Economic globalization has promoted the formation of the world multilateral trading system,accelerated the development of international trade and global trade liberalization,and intermediate trade has also developed rapidly with the deepening of economic globalization.The liberalization of intermediate trade not only saves the production cost of enterprises,but also brings more high quality and diversified intermediate input elements,which improves the degree of product diversification and promotes the expansion of enterprise production scale.The liberalization of intermediate trade brings new opportunities for the development of enterprises.Under the situation that China's economy has entered the new normal,whether enterprises can seize the opportunities brought by the liberalization of intermediate trade is very important to the development of enterprises.It is of great theoretical and practical significance to systematically explore the influence of intermediate trade liberalization and product diversification on enterprise markups.This paper focuses on the following issues: first,how does the deepening liberalization of intermediate trade affect the increase of China enterprise markups and through what way? Second,with the in-depth development of intermediate trade liberalization,the types of intermediates import have increased,and the diversification of products has become more and more abundant.Does the liberalization of intermediate trade have an impact on the diversification of products? Third,what is the effect of product diversification on the enterprise markup? This paper defines the concepts and measurement methods of intermediate trade liberalization,product diversification and the enterprise markup.And it systematically analyzes the impacts of intermediate trade liberalization and product diversification on the enterprise markup from many ways,such as cost reduction effect,competition effect and intermediate diversification effect.The theoretical analysis shows that intermediate trade liberalization and product diversification can promote the enterprise markup,and the reduction of intermediate input products' tariff will bring more high quality and diversified intermediate input elements,which can strengthen the production efficiency of enterprises,so as to improve the increase rate of enterprises.In this paper,China Customs Database,China Industry Business Performance Data and Tariff Download Facility Database from the World Trade Organization in 2000-2006 are used to accurately calculate tariffs,the enterprises markups faced by each enterprise and the product diversification.The empirical study shows that:(1)On the whole,the liberalization of intermediate trade has significantly increased the enterprise markups,meanwhile,also promote the diversification of products,and the diversification of products will also significantly increase the enterprise markups.(2)Classified data by the types of ownership shows that: The liberalization of intermediate trade makes the foreign-funded enterprises markup increase significantly,but the markups of state-owned enterprises and private enterprises are not significant.This may show that foreign-funded enterprises have more advanced technology level and higher production efficiency,and their market competitiveness is stronger,so foreign-funded enterprises are most affected by the liberalization of intermediate trade.(3)From the perspective of trade mode,after the enterprises engage in the import of intermediate goods in general trade,they get the positive "markup effect",but the result of the enterprise in processing trade is not significant.The possible explanation is that the enterprise in processing trade enjoyed the tariff-free preferential policy for a long time.The research of this paper provides a train of thought for China to continue to promote the reform of trade liberalization and to increase the cost-added rate of enterprises.