The Theoretical And Empirical Analysis Of Financial Development On Exports Sophistication

During the30years practice of financial system reforming, our country hasestablished a diversified financial system which adapt to the developmentrequirements of socialist market economy, this financial system has laid a stablefoundation for long run economic growth, it also verify the truth that the theory offinancial development has great significance on our nation’s long run economicgrowth. Meanwhile, export-oriented trade policies has made export trade became theimportant engine of economic growth in China, through participating in goods,services and technology exchange among countries, on the one hand, realizedresources in global optimal allocation, on the other hand provide an opportunity forour country to participate in the international competition. So,when it turns toeconomic growth,is there a connection between financial development and exporttrade? If yes,whether the financial development can accelerate the optimization of theexport trade’ structure or not? If it can, in what way?Studies indicate that financial development can be the origin of c omparativeadvantage, it impact the structure of export trade through the technological advanceseffect, technological advances effect the performance of the financial development ofFDI technology spillovers play. Based on the exports sophistication index whichmeasures export product quality, this paper, from the perspective of FDI spillovers,empirically analyzed the mechanism of the effect of financial development on exportproduct technical complexity by using multi-national trade and income data.Firstly, this essay discusses the related researches about the influence offinancial development on export trade mechanism.Secondly, using the data of thethree yards export in SITC2classification standard from1996to2010, I estimated theexport product technical complexity of239kinds and the export product basket’stechnical complexity of216countries. Thirdly, I considered the mechanism that thefinancial development raises the exports sophistication under the perspective of FDIspillovers. By analyzing the theory, I use the panel data of91countries from1996to2010to analyze the mechanism that the financial development raises the exportproduct technical complexity under the perspective of FDI spillovers. The resultsshow that the indicators of financial development in stock market has positive effecton enhancing the export product technology complexity, but when we put it in banking market, it doesn’t make sense. Finally, based on the revelation from empiricalresearch conclusion, we make some suggestions on how to raise the exportsophisticaion and optimize the structure of export trade.