The Performance Effects Of International Intra-product Specialization Patterns In China’s Industries

Under the strong impetus of economic globalization and technology advances, international specialization stepped into a stage which based on value chain. China participates into intra-product international specialization mainly through the processing trade. This new pattern of international division of labor generates essential effects on China’s industrial development. We need to think seriously that how to effectively use intra-product international specialization so that it can bring benefits to Chinese economic and social development. That is the main objective of this paper.Firstly, this paper relaxes some preconditions of comparative advantage theory and economies of scale theory, combines with global value chain theory, to build a more complete theoretical foundation of intra-product international specialization. Then bases on the modular we analyzes an effective forms of intra-product international specialization and its inherent mechanism. Finally, we sort the relevant literature of intra-product international specialization’s impact on industry performance.By analyzing the UN Comtrade data, we find that China’s competitiveness of intra-product international specialization focuses on the labor-intensive production stages of low value-added. In the process of integrating into intra-product international specialization, Chinese comparative advantage gradually rises to the high-end value chain. China’s international specialization status has certain improvement, but to achieve industrial upgrading still requires a relatively long and hard working. In the empirical part, based on the panel data of 2002-2012, we estimate the relationship of four embedded patterns(intermediate goods imports, intermediate goods exports, final goods imports and final goods exports) and labor productivity. The results show that intra-product international specialization has promoted productivity growth from three aspects of intermediate goods imports, intermediate goods exports and final goods exports, while intermediate goods exports have made greatest contribution to such growth. Both "intermediate goods imports- deep processing- intermediate goods exports" and system integration model have a positive impact on the productivity. From the results of different technology industries, exports of intermediate goods and final goods improve productivity of different technology industries. intermediate goods imports would benefit the low-tech industries, but hinder technology upgrading of high-technology industries; final goods imports would significantly hinder low-tech industries development, but in favor of middle-technology industries. "intermediate goods imports- deep processing- intermediate goods exports" mode promotes low-tech industries productivity, while system integration model favors low-technology and high-technology industrial development. This paper also discuss intra-product international specialization’s impact on income distribution. From the whole industries, intermediate goods imports, intermediate goods exports and final goods exports would improve the relative wages of skilled labor, while intermediate goods exports has greatest contribution. From different types of technology industries, intermediate goods import and export would widen low-technology and middle-technology industries relative wage gap. Final goods imports has a positive effect on expanding low-technology industries relative wage gap. Final goods export would significantly reduce relative wage gap of different technology industries. Four modes of the high-technology industries have a significant effect on reducing relative wage gap. Finally, the main findings are summarized and policy recommendations are put forward.