The Relationship Between Exporting Choice And Productivity

As the development of the theory of International Trade and the access of getting the micro-level firms database, more and more researchers begin to focus on the research of firms’ exporting behavior instead of the macro international trade phenomenon. At the beginning of investigating the firms’behavior, researchers found out that there is a positive connection between a firm’s exporting behavior and its productivity; only the most efficient firms can have access to the foreign markets. Later, Melitz built a model named the Heterogeneous Firm Trade Model, and proved that only the most efficient firms could afford the fixed exporting costs and successfully exporting; while the least efficient firms would exit the market due to competition. The comprehensive demonstration of heterogeneous firms is that different firms have different productivity level.When using different countries’data to estimate the model, most foreign researchers found the data results fit the model very well. However, when it comes to the Chinese manufacturing firms, some researchers found out there is a different result. They found out a negative connection between productivity and a firm’s exporting behavior. They named this phenomenon "The paradox of productivity and exporting" or the "The puzzle of productivity and exporting."In order to text the real relationship between exporting and productivity in Chinese manufacturing industry. This paper uses the micro-level data of Chinese manufacturing firms and exploits three different methods to estimate the Total Productivity Factor of the manufacturing firms, in the hope of getting a reasonable comparison of productivity. Then, this paper used a classic Probit Model to test the relation between TFP and Chinese manufacturing firms’exporting choice in different dimensions in order to get a compressive understanding and explanation of the result.