Research On Firm Internationalization Based On The Heterogeneous Firm Trade Theory

Since China has gained the access to the World Trade Organization, enterprises in China take an active part in the international cooperation and competition with the positive involvement in the process of economic globalization and integration, achieving unprecedented success in terms of export and FDI (Foreign Direct Investment). However, it can’t be denied that with the increasingly serious international competition, many problems exist in the development of Chinese own economy at the same time, which means that Chinese enterprises are confronted with various challenges and difficulties in the process of internationalizatio. On the other hand, as a development frontier of trade theory, the heterogeneous firm trade theory brings the firm heterogeneity—a kind of hypothesis into the trade mode to research the influence on economy from the behavior and trade of enterprise. As a result, many trade phenomena can be explained excellently, advisory ideas to the behaviors of enterprises and government can be provided. Therefore, this essay is based on the framework of the heterogeneous firm trade theory, aiming to explore the current situation of Chinese export and FDI (Foreign Direct Investment) and to give proper advice.This thesis consists of six parts. The first part is a literature review of the heterogeneous firm trade theory from scholars at home and abroad, including some results of the basic theoretical model and empirical research. The second part of this thesis puts emphasis on the introduction of two models—the Melitz model and HMY model, according to which the production, export and FDI decision of enterprises will be analyzed; how the foreign economic activities of enterprises affect the enterprises, the industry and even the whole economy will be analyzed as well. The third part of this thesis is a detailed representation of the general situation and major issues concerning the export and FDI of Chinese enterprises. The fourth part explores further into the specific industry, by researching the relevant data of the specific industry, to make an analysis about the firm heterogeneity, the differences and concrete issues with respect to the export and FDI of Chinese firms. The fifth part is an empirical research, the result of which is that the direct investment of Chinese firms is affected by "self-selection effect" while the export is not; in addition,"learning effect" impacts the direct investment to a large extent while it influences the export a little. The last part of this thesis is a brief summary of the previous researches, offering some related advices from two perspectives—the enterprises and the government.