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Analysis on the Influence of Export Trade to Firm Size Distribution

Author: MaJing
Tutor: LiuHaiYang
School: Dalian University of Technology
Course: International Trade
Keywords: Firm Size Distribution Export Trade Pareto Exponent
CLC: F279.2
Type: Master's thesis
Year: 2013
Downloads: 42
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Abstract

With the China’s economy deep into the global economy, trade openness changes all aspects of China’s politics, economy and culture. And extensive researches were conducted by many scholars for this change. However, related researches paid little attention to the impact on firm size. In this paper, a phenomenon that the trade eventually leads to firm size polarization is observed based on the heterogeneous enterprise trade theory. Trade itself has a kind of "Matthew Effect" that high productivity enterprises expand the market and low productivity enterprises reduce the firm size. This polarization will have a certain impact on the subsidies, survival, profit and innovation of enterprises.The thinking above is developed at both theoretical and practical aspects. At the theory level, pareto distribution is introduced into the Melitz model to prove that the size distribution of the export enterprises are more uneven, equal to that pareto index is lower. By using Chinese micro enterprise database from1999to2009, we find that Pareto exponent of non-export enterprises size distribution is equal to0.80, but the number for the export one is0.66. So the export can affect the polarization mentioned above and change the overall distribution of China’s enterprises size. The conclusion obtained is true for all years, regions, all kinds of ownership and more than80%of the industry.Impact on firm size distribution of export trade is further tested by using the1999-2009provincial panel data and GLS and PCSE method separately. And also other factor is tested. The results show that:there is a negative effect of proportion of state-owned enterprises and the per capita GDP on Pareto exponent of enterprise size distribution; social fixed assets investment and the high degree of marketization level improve the pareto exponent of enterprise size distribution. In terms of government forces, infrastructure and education expenditure proportion ratio is positively correlation with firm size distribution. But the expenditure proportion of science and technology is higher, the firm size distribution is more uneven. It turned out that science and technology innovation inputs are given to large firm rather than small and medium-sized firm. And the government pays insufficient attention to the development of small and medium-sized firm. Considering standardization coefficient, we find that marketization and proportion of state-owned enterprises have the largest effect on the firm size distribution. Relative to the export trade, the influence of foreign trade on the firm scale distribution is larger. The influences of the government forces are not very significant.Summing up the research above, we think that we should notice the phenomenon such as weak enterprise contraction and strong enterprise monopoly while expanding export trade. We should also enhance the marketalization to finish the procedure from planned economy to market economy effectively and forme good market environment to provide small and medium-sized firm a fair competition environment, which make the Chinese economy sustainably develop in the full competition.

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