Uncertainty and enterprise export recovery in China: Does the market integration matter?

What is it about?

Maintaining the stability of foreign trade in an uncertain environment is crucial to building a new development pattern. By combing through the existing literature, this paper analyzes the impact of economic policy uncertainty on enterprise export recovery from the perspective of market integration. Firstly, theoretical analysis shows that economic policy uncertainty is expected to attenuate enterprise export recovery levels by amplifying export transaction costs. Secondly, the escalation in market integration is anticipated to mitigate the attenuation above effect through the mechanism of "enhanced production efficiency", while simultaneously amplifying it through the mechanism of "intensified market competition". Based on the empirical test of China’s micro-level data, it is found that the rise of market integration generally alleviates the weakening effect of economic policy uncertainty on enterprise export resilience, and this mitigation effect is more obvious for high-efficiency enterprises; The test results of further mechanism analysis and heterogeneity analysis are also consistent with the logic of theoretical analysis.

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Photo by CALIN STAN on Unsplash

Photo by CALIN STAN on Unsplash

Why is it important?

The main innovations and contributions of this paper lie in four areas: (1) This paper introduces an innovative perspective by analyzing macro-level uncertainty, meso-level market integration, and micro-level enterprise exports in the same framework, providing a new research perspective. (2) Identifying positive and negative channels, and pioneeringly analyzes the impact of market integration on the two channels of uncertainty and enterprise export recovery from both positive and negative perspectives of "efficiency enhancement" and "competition intensification", and at the same time, this paper enriches the literature on the topic of uncertainty and export trade. At the same time, this paper enriches the literature on the topic of uncertainty and export trade. (3) Distinguishing the differences in efficiency, this paper focuses on the perspective of enterprises’ productivity differences to test the heterogeneous impact of market integration on the enterprise export recovery with different efficiencies under uncertainty and enriches the relevant literature studying the impact of domestic market integration on economic and trade development. (4) Offering policy recommendations, the paper’s conclusions have significant policy guidance that can help emerging market countries such as China to quickly recover their exports under uncertainty.

Perspectives

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Based on the existing literature, this paper expands upon the research topic to a certain extent. It integrates macro-level uncertainty, Meso-level market integration, and micro-level enterprise export recovery into a unified framework to analyze the impact of uncertainty on enterprise export recovery following shocks. Additionally, it categorizes enterprises based on their efficiency and explores the specific effects of market integration on different efficiency levels. The study confirms that improving market integration can enhance enterprise resilience in exporting. Furthermore, this positive moderating effect is more pronounced for efficient enterprises while inefficient export enterprises struggle to benefit from it. Therefore, this paper provides empirical evidence for the micro-level mechanism underlying the relationship between market integration, uncertainty, and enterprise export recovery.

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