Model of Firm-level Export Decision in the Cycles of Technological Leadership for High-Tech Industry in a Less-Developed Country

Abstract

Much of the theoretical literature on the relationship between firms' exports decision and productivity has produced rich and useful results for developed countries in the past. This paper makes a pioneering attempt to explore the determinants of firm-level export behaviors in high-tech industries in the context of a less-developed country (China). By introducing a learning effect in the cycles in technological leadership as a new explanatory variable into traditional production function, the paper develops an original two-stage micromodel of international trade. Productivity advantage always determines the export decision, and export behaviors also depend on the characteristics of technology progress in the cycle, firm's R&D efforts and foreign direct investment. At the stage of routine technology progress, productivity advantage facilitates firms' exporting labor-intensive parts or components of high-tech products; at the stage of introduction of new technology, firms have opportunities to become technological leader and base their export decision on innovation edge. Then, a microeconometric study is used to analyze exporter performance in China's information and communication technology manufacturing industry