Since the reform and opening up, China’s domestic market has experienced serious market segmentation problems between regions. Forming a unified domestic market pattern is the key to bringing into full play the advantages of the local market and economies of scale in China, and breaking through the invisible barriers of culture and language in different regions is the key to further promoting the strategy of balanced regional development. As an important non-institutional factor, the invisible barriers formed by dialects hinder the formation of large national markets from two aspects of cost and preference, and inhibit the exertion of the local market effect and scale economies effect of enterprises, resulting in the decline of export competitiveness of industries with increasing returns to scale. Based on the data of Chinese industrial enterprises and dialects, this paper calculates the scale of the common dialect market in different county-level administrative regions of China, and constructs an econometric model to test the impact of the common dialect market on the extensive margin and intensive margin of enterprise export expansion. It examines the export effect of the common dialect market from the perspectives of the grouping analysis of economies of scale and DID analysis. This paper finds that the expansion of the common dialect market scale will not only lead to the increase of the number of enterprises in the industry with increasing returns to scale, but also lead to the expansion of the scale of enterprises, and promote the expansion of enterprises in the industry with increasing returns to scale on the extensive margin and intensive margin. After estimating the DID model based on the industry-level scale return coefficient and the capital resale rate, this paper also confirms the export effect brought by the expansion of the common dialect market scale. The expansion of the common dialect market scale has significant scale economy bias characteristics on the export of enterprises, which will lead to the export structure of our country more inclined to the industry with increasing scale return. It is conducive to the development of economies of scale. From the perspective of dialects, this paper enriches the research on the local market effect and the influence of market segmentation on exports, and provides important evidence for the mechanism of dialects affecting economic performance. The conclusions of this paper are helpful to use the economies of scale obtained by breaking the barriers of dialects to form the new momentum of China’s foreign trade, and also point out that the conflicts and problems between preserving cultural markers and economic development should be well handled.
Dialect Barriers to Domestic Market Scale Expansion and Their Export Effects
Journal of Finance and Economics Vol. 45, Issue 05, pp. 125 - 138 (2019) DOI:10.16538/j.cnki.jfe.2019.05.010
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Cite this article
Jiang Wei, Zhou Quan, Gan Kaijun. Dialect Barriers to Domestic Market Scale Expansion and Their Export Effects[J]. Journal of Finance and Economics, 2019, 45(5): 125-138.
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