Intra-product Specialization And Industry Development Of China

With the development of economic globalization and informationization, intra-poduct specialization become the main form of international trade by taking importing and exporting intermediate products as the main feature. Different countries specialized in certain production links through outsourcing and sub-contracting. The trade pattern shows "fragmantation" and "slicing up the value added chain", which have accelerated the process of international industrial transfer and industrial development. Different with the developed countries, China participates in the international division mainly by undertaking outsourcing and processing trade.The purpose of this dissertation is to explore the mechanism of intra-product specialization to developing countries' total factor productivity from the perspective of undertaking outsourcing countries, and examine the effects on productivity, export technical level and employment at the level of industry. The dissertation measures the degree of intra-product specialization of34industries in China during1994-2007via vertical specialization, imported inputs as share of gross output and imported inputs as share of total consumption. The dissertation also develops a new method of identifying the sophistication of exports by sector and investigates the contributing factors.The mechanism is that intra-product specialization deepening brings the terms of trade changes, results the proportion of researchers (endowment structure) change, and then adjusts the technical level of developing countries, affects the industrial development finally. During the process, when the terms of trade has not changed, participate in the intra-product specialization can improve productivity; when the terms of trade changed and domestic factor intensity has not changed, the productivity growth slowing if terms of trade improved, and productivity growth accelerating if terms of trade deteriorate. In long term, technical level is endogenous and the factor intensity would shift to fewer researchers, the productivity will decline. Therefore the productivity of undertaking outsourcing countries will be the showing "up-down-up-down" M shape.Secondly, the measurements find that China's participation in the intra-product specialization decreased fisrt and then increased. Using more long sections of panel data, the empirical analysis finds that the deepening of intra-product specialization improves the productivity, and the effect is mainly embodied by the interaction with the capital investment.Thirdly, this dissertation also focus on China's export structure, whether measure by high-medium-low technology industry, the sophistication of exports or export unit value, China's export technology level has been rising steadily. The growth of R&D and foreign-invested enterprises are found to play important roles in generating the export competivieness. The improvement of capital intensive is found to be not conducive to export technology level. The roles of different types of intra-product specialization are inconsistent. Increases in vertical specialization significantly improve the export technology level, imported inputs as share of gross output and imported inputs as share of total consumption had no significant effect.Finally, based on the theory and empirical aspects, this dissertation explores the effect of intra-product specialization on employment.The results showed that there is no direct role in stimulating employment. Import substitution effect and producitivity effect brought by intra-product specialization could reduce employment, and the scale effect could increase employment, but the net effect is negative in China. However, the role of interaction of intra-product specialization with output is positive, which can increase employment. Improvements in R&D expenditures appear to be the key in the country's evolving employment structure; intra-product specialization has nagetive effect on the growth of the proportion of scientific and technical labor.The contributions of this disdertation are:(1) From the perspective of undertaking outsourcing countries to analyze the mechanism and the effects.(2) The data covers longer period and wider corsssection.(3) The dissertation develops a new method of identifying the sophistication of exports by sector.(4) This dissertation explores the effect of intra-product specialization on employment skill structure.The effects of intra-product specialization on productivity, export structure and the employment have confirmed that China is in a period of transition from the first stage to the second stage. The deepening of intra-product specialization will still promote industry productivity and export technology level in short term. Capital deepening can increase the output, deteriorate export structure and employment. The raise of the rate of foreign-invested enterprises can improve the export technology level. The increasing of R&D expenditures can significantly improve productivity, export technology level and employment structure.