| This thesis demonstrates the whole process of China’s development from its initial reliance on foreign direct investment (FDI) to later independent growth. Since the 1970s, multinational corporations have developed rapidly and global resource allocation was achieved through their direct investment worldwide. With cross-border capital flows, the advanced factors of production such as technology, brand, sales network, and human resources are also transferred, which explains the international factor movements led by multinational incorporations through capital inflows. During the process of China’s integration into global economy, the factor inflows were firstly brought by foreign capital, then independent development was achieved by digesting and learning these factor inflows. This thesis examines the paths of China’s industrial upgrade by attracting FDI and bringing advanced factor inflows under the background of economic globalization.According to theories and practices, this thesis discusses the following four themes:First, factor movements are the essential characteristic of economic globalization. Factors of production constitute commodity and they are transferred indirectly in the international trade of commodities. The development of multinational corporations strengthens the links between trade and investment. Investment not only can replace trade, but also can generate trade. Factors of production move across borders with foreign direct investment. Therefore, understanding factor movements is the starting point of analyzing economic globalization.Second, in the background of globalization, the path of industrial upgrading can be initiated by factor inflows. The allocation of global value chain is further refined due to factor movements, and the economic development of every country becomes increasingly inseparable from globalization. Thus, developing domestic economy through foreign factors of production becomes an important consideration for developing country’s economic growth. Likewise, it was the introduction of foreign advanced factors that started China’s industrial upgrading.Third, the first phase of industrial upgrading is achieved by presence effect. Advanced factors of production flow into host countries through foreign direct investment, affecting the structure of comprehensive factors, forming presence effect of industrial upgrading, and advancing upgrading at the initial stage directly, namely the first effect.Forth, the second phase of industrial upgrading is the conversion from presence effect to spillover effect, scale effect, and wealth effect. From the perspective of factor movements, this thesis demonstrates that factor inflows promote industrial upgrading through four paths, namely presence effect, spillover effect, scale effect, and wealth effect. Presence effect is identified as the first effect, as it changes the structure of comprehensive factors. The other three paths are identified as the second effect. The conversion from the first effect to the second effect occurs during the whole process of industrial upgrading.From the perspective of factor movements, this thesis studies how China has realized its industrial upgrading during the economic globalization and attempts to be innovative in the following aspects:First, this study provides theoretical arguments for industrial upgrading by demonstrating that the essence of economic globalization is flow of factors. The core characteristic of industrial upgrading is factor upgrading, and the international factor movements caused by capital flows across borders make industrial upgrading no longer limited to domestic factor endowments under closed conditions. This means factor flows bring more opportunities and possibilities of industrial upgrading.Second, this study demonstrates the relationship between structure of factors and industrial upgrading. No matter the industrial upgrading occurs to product or technique, or whether it happens among industries or factors, it inherently requires the structure of factors of production to be upgraded. The four paths of industrial upgrading optimize the structure of factors through four aspects and advance industrial upgrading.Third, this study proposes a two-stage theory for the upgrading of structure of factors and industrial upgrading. The two stages of industrial upgrading, which take place at different stages in the same period, are not independent. While factor inflows occur at the first stage, spillover effect, scale effect, and wealth effect occur at the second stage and create advanced paths of industrial upgrading.Fourth, based on the overall findings of this study, China’s paths of future industrial upgrading and its policy choices are examined, and suggestions for developing countries’economic development are made. Specifically, this study advises that China should gradually advance its paths of industrial upgrading through second effect. The study also explores applicable methods of industrial upgrading for developing countries during the process of globalization.This thesis consists of three parts. The first section, including the introduction, the first chapter and the second chapter, shows the background, significance, contents, methodology, and framework of this thesis. It also reviews existing literature, examines theoretical arguments and establishes the foundation of this thesis.The second section, including the third, fourth, fifth and sixth chapters, investigates the impact of factor inflows on China’s industrial upgrading from the perspectives of four paths respectively, namely presence effect, spillover effect, scale effect and wealth effect. The occurrence of presence effect is owing to the inflow of new factors of production which directly affects the structure of original factors of production and promotes industrial upgrading. Since its economic reform and opening-up, the inflow of foreign advanced factors of production have changed the number and the structure of China’s original production factors, and built a new "integrated structure of factors", resulting in the change of the inputs of production. Therefore, the increasing inflow of advanced and scarce factors affects industrial upgrading directly at the production level. Spillover effect means that, under the condition of factor inflows, a series of external effects occur at corporation, industry and industrial structure levels, and promote industrial upgrading indirectly. For example, production efficiency can be increased indirectly through learning effect from corporations, association effect between industries, and competitive effect within industries. Scale effect argues the continuous inflow of factors enables large-scale production, which lowers the fixed cost per unit, reduces the long-run average cost and saves production cost for corporations or industries, leading to a greater growth of production. The result that production is improved to reduce average cost due to factor inflows is known as scale effect. Wealth effect reveals that greater wealth accumulated through higher factor income after the inflow of factors can purchase more advanced factors of production to achieve further industrial upgrading. However, the wealth effect can be sometimes hampered by inappropriate industrial policy.The last section of this study consists of the seventh and eighth chapters. The seventh chapter explores the paths and policy choices of industrial upgrading for China and other developing countries. China’s development benefited from factor inflows at the early stage and now it should consider how to achieve economic transformation and development through digesting advanced factor inflows more efficiently and through generating factor income from factor outflows caused by capital movement. The eighth chapter presents the conclusion, enlightenment, and limitations of this thesis and proposes directions for future research.
|
PDF Full Text Request