The Impact Of Financing Constraints On Exports And Innovation

A large number of research results show that financing constraints are importantfactors to influent the investment decisions. Internal financing and external financingwill affect the investment behavior of export and innovation. In the real marketenvironment, as information asymmetry and other market failures exist, the financingenvironment of exporter is not optimistic. Capital investment is one of the two mostdecisive factors in the activities of technological innovation.This article will be divided financing constraints into external financingconstraints and internal financing constraints. Internal and external financingconstraints both impact on exports and innovation, and then extend this hypothesis tothe industry level. This paper use the panel data of the industry of textile to study theeffect that financing constraints made on export and innovation behavior. Based onthis evidence it will make three arguments:(1)financing constraints has negativeinfluence on innovation of exporters;(2)export can relieve internal financingconstraints,promote enterprise innovation, so export has a positive incentive effect oninnovation;(3)Considering external financing constraints, the incentives to innovatewill decline when the companies complete export with the cost of external financingincreasing. Empirically, the research on the relationship between the industry capitalstructure and exports and innovation, based on the panel data of Chinese textileindustry shows that: Industry profits(internal financing) significantly promote exports,while having no significant effect on innovation; bank loans(external financing) has apositive effect on innovation and exports;FDI(external financing) inhibits to makeinnovation in textile industry.Finally, based on the research findings, some concrete suggestions are put forwardto alleviate our country’s policy of financing constraints, to promote growth ofChina’s textile enterprises and to actively carry out innovation activities.