The Analysis Of The Organizational Form Choice In Vertical Production

The scale of labor, capital, technology and other input factors of production flowing and allocating globally have been increasingly under the action or influence of global economy integration, development of information technology revolution and the transportation. The object of international division of labor and trade have been deep into the process level, the continuously developing modes of vertical division of production have led to the extension of the vertical supply chain in many countries, therefore the industrial structure, technological level and the national welfare as well as the nature and scale of global trade of the participating countries have been significantly affected. The modes of vertical division of production mainly show in two ways:foreign direct investment and international outsourcing.As the world's factory, China is bound to face the two global industry modes as the role of host country However, the effect of the two vertical production patterns on the host country are different, so it is extremely important to study how and why final-good producer choose between FDI and cross-border outsourcing when globally alocating industrial chain. Moreover, when a country has become an undertaking base of transnational outsourcing, what effect would be it brought to this country compared to FDI? All of these questions need to be solved through theoretic and empirical analysis of motivation, operation mechanism and effects of final-good producer choosing ownership in vertical specialization. This paper try to study thess questions based on China, a major host country of FDI and international outsourcing.The phenomenon of two new modes of cross-border industry chain allocation including FDI and cross-border outsourcing coexisting has beyond the scope of traditional trade theory which is based on complete contract and division of production. For the present, new research have begun to focus on introducing the industrial organization theory and incomplete contract theory into trade theory, the combination of trade theory and choice of industrial organization will be a new and important field of research. In this field, it is particularly important to study the motivation of vertical production mode selection under the property rights theory.In this paper, I have analysis the reason of the vertical specialization ownership choice based on the theoretical and empirical aspects. In the theoretical aspects, firstly, in the final product market, monopolistic competition is introduced. Several kinds of industry will coexist, and also, D-S of monopolistic competition framework will be considered in the analysis of the final product market. And then determine the final good price. Secondly, in the final good manufacturing, incomplete contractual environment is introduced. According to the logic method and analysis framework under the incomplete contractual environment, I analyze possible actions and interactions of the upstream and downstream enterprises in the vertical specialization when they coopertated, and the process and results of the game using Game Theory Analysis. The factors influncing both of the players are also considered in the form of composite function. Then I analyze the change of strategy in each party and interactive results under the different ownership of the vertical specialization. Finally, I obtain the profit and distribution function form of final good producer and intermediate producer. By comparing the profit of final good producer in different modes of ownership, I analyze the deciding factors of vertical specialization ownership choice, and then analysis the problem in the industry level and district level specifically. Based on this theoretical foundation and analytical framework, I also have a study on technology transferred under different ownership forms of the vertical specialization, then the technology transfer and spillover effects on host countries using other related Technology Transfer Theory.In empirical research, this paper mainly uses panel data analysis, according to Chinese statistical data, quantize variables in the derived theoretical model, do parts and whole empirical testing with the model, analyze and compare the parameters in the level of industry and market, then study the the same and different factors in intermediate good producing and trade under different forms of ownership attracted by China, and do empirical research on the effect of vertical specialization under different ownership on Chinese innovation capability.This paper arranges as the following:Chapterâ…¡gives the overview and discussion of the theory related to vertical specialization, focusing on the analysis of property rights theory related to ownership selecting in vertical specialization; in Chapter III, there is the general theoretical analysis of selection motivation of ownership in vertical specialization, it studies the interaction process of final good producer and intermedia product producer under different ownership in vertical specialization through a simple game model, providing a general theoretical guidance to the following theoretical and empirical studies in the levels of industry, region, technology transfer and dissemination. Prior to the comprehensive analysis, this paper gives the statistical description of the current situation of China undertaking the vertical specialization in Chapter IV, focuses on the analysis of processing trade, provides a macro background to the following analysis through survey the whole, industrial and regional distribution of vertical specialization in China. The next parts are the specific theory and empirical test in this paper. Chapter V&VI give the theoretical and empirical analysis of factors from the viewpoint of industry and region respectively in choosing ownership in vertical specialization. In Chapter VII, based on the previous chapters, this paper gives the theoretical and empirical analysis of effect of different ownership in vertical specialization on the technological innovation capability of host country, finally, this paper gives a summar of whole Thesis.