The Effect Of Factor Prices Distortions On Export Variety:Evidence From Chinese Industries

Industry is an important support for a country’s economic development. Industry plays an important role in the real economy. The real economy determine the development of the national economy. In the process of reform, our products markets almost achieve the liberalization. But the extent of marketization is so slow that the factor markets remain serious distortion. It influences the improvement of opening-benefit. This dissertation has used the C-D production function method to measure the factor prices distortions. The result shows that the factor prices distortions of most industries in China are still increasing. Based on this background, the article analyzes the impact of the factor prices distortions on the export variety.Our developmental goal of trade is not merely a quantitative growth, export structure optimization and updating product quality gradually become the central issues in the critical period for the transformation and upgrading of Chinese foreign trade strategy. Export variety growth is one of the most important sources to gain international trade interests, the article discuss the content about export diversification. This paper has adopted the model of Feenstra by using export data in form of SITC Rev.35-digits to measure China’s export variety in industries from 2003 to 2011.The result indicates that the export variety decrease slightly in fluctuations compared with the same industries of the United States.On the basic of the relative researches about the determinant of export variety, this dissertation makes an empirical research about the effect of factor prices distortions on export variety with 32 different industries’panel data which covers nine years. We also use different regression methods to verify the robustness of empirical results. As a result, the factor prices distortions have negative effects on the improvement of export variety. The slowness of marketization of factor market affects market energy and economic efficiency. Many industries are still in the low-end processing of global production chains for a long time. Many export products have lower grades and less species. Other influencing factors include total factor productivity, research and development investment and capital intensity. According to the above conclusion, some policies and proposals are proposed for the current factor prices distortions to improve Chinese export variety and the welfare of the foreign trade.