Advertisement

Financial Development and Changes of China’s Foreign Trade Structure

  • Yujiang Bi
  • Shuangcheng Wang
Part of the Communications in Computer and Information Science book series (CCIS, volume 208)

Abstract

The purpose of this paper is investigation the relationship between financial development and foreign trade in China using categorized data via SITC (Standard International Trade Classification) one-digit codes. The empirical method is co-integration test. The empirical results provide clear support for the hypothesis that different industries’ trade growth has different dependence on financial support. The financial development influenced capital intensive and technological intensive commodities more than others, but price and world economic status influenced primary products’ foreign trade notably. The policy implications is government intervention can be called for to help efficient but financially constrained firms to overcome hinders that prevent them from entering international markets and expand their activities abroad.

Keywords

Financial development Trade structure SITC Co-integration test 

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. 1.
    Beck, T.: Financial Dependence and International Trade. Review of International Economics 11, 296–316 (2003)CrossRefGoogle Scholar
  2. 2.
    Do, Q.T., Andrei, A.: Levchenko. Comparative Advantage, Demand for External Finance, and Financial Development. Journal of Financial Economics 86, 796–834 (2007)CrossRefGoogle Scholar
  3. 3.
    Desai, M.A., Foley, C.F., Forbes, K.J.: Financial Constraints and Growth: Multinational and Local Firm Responses to Currency Depreciations. Review of Financial Studies 6, 2857–2888 (2008)CrossRefGoogle Scholar
  4. 4.
    Ju, J., Wei, S.J.: Endowment Versus Finance: A Wooden Barrel Theory of International Trade. IMF Working Paper, WP/05/123,(2005)Google Scholar
  5. 5.
    Markusen, J., Venables, A.: The Theory of Endowment, Intra-industry and Multi-national Trade. Journal of International Economics 52, 209–234 (2000)CrossRefGoogle Scholar
  6. 6.
    Manova, K.: Credit Constraints, Equity Market Liberalizations and International Trade. Journal of International Economics 76, 33–47 (2008)CrossRefGoogle Scholar
  7. 7.
    Manova, K, Zhang, Z.: Export Prices and Heterogeneous Firm Models. Mimeo (2008)Google Scholar
  8. 8.
    Melitz, M.: The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity. Econometrica 71, 1265–1725 (2003)MathSciNetCrossRefzbMATHGoogle Scholar
  9. 9.
    Rajan, R., Zingales, L.: Financial Dependence and Growth. American Economic Review 88, 559–586 (1998)Google Scholar

Copyright information

© Springer-Verlag Berlin Heidelberg 2011

Authors and Affiliations

  • Yujiang Bi
    • 1
    • 2
  • Shuangcheng Wang
    • 1
    • 3
  1. 1.Opening Economy and Trade Research CenterShanghai Lixin University of CommerceShanghaiChina
  2. 2.School of Economics and TradeShanghai Lixin University of CommerceShanghaiChina
  3. 3.School of Mathematics and InformationShanghai Lixin University of CommerceShanghaiChina

Personalised recommendations