Study On Recession Mechanism Of Old Industrial Bases

The transformation of old industrial bases(OIBs) is a global problem, not only the ones in northeast China have to face, but some in the developed countries also have an experience of transformation. Germany's Ruhr, France's Lorraine, the central region of the United Kingdom, Japan's Kyushu and the United States' "Rust Belt" region and other old industrial bases all had experienced the process from prosperity to recession, and had taken a variety of measures to reform and revitalization. This paper aims at drawing on the transforming experience of the old industrial bases in the world and discussing the recession mechanism of the old industrial bases in northeast China to provide a theoretical reference for the bases' transformation and revitalization.In this paper, we combined theoretical research with empirical ones. Based on the results of previous studies, and through summarizing the commonness of the old industrial bases, the paper systematically discussed the intrinsic mechanism of the recession of old industrial bases, and concluded that the industrial technology system of old industrial bases is in it's own recession stage of life cycle, which is the essential cause of recession.This paper can be divided into six parts: Part I: From the evolution of the old industrial bases, we summarized the concept of them and probed into the commonness of the old industrial bases and introduced the history of the main ones in the world. It held that the old industrial bases took the first and second industrial revolutions as an opportunity to form the industrial community or cities where they gathered a large-scale of the heavy chemical industries near the resources origin, because of backward industrial technology, resources depletion and no timely transferring to new industries, they lost the original status and roles. The common features of the old industrial bases include: self-contained industrial system; high proportion of traditional industries; slow economic growth; high unemployment rate lead to serious social problems; depletion of natural resources, environmental pollution. The world's chief old industrial bases are: Germany's Ruhr, Lorraine in France, Kyushu in Japan, and the central and western region of the United States ("Rust Belt"), the central region in the United Kingdom, and China's northeast region.Part II: Analysis of the current theories on recession mechanism of the old industrial bases. The theories can be divided into four schools: The industrial structure theory, the path-dependent theory, the "resource-cursed" hypothesis and the life cycle theory. The Industrial structure theory can explain the relation between economic growth and industrial structure from the angle of industrial structure and elucidate the evolution of it, however, there is misunderstanding about the evolution from"1,2,3"to"3,2,1". And the classification has aroused controversies, which lacks an effective criteria for the rationality of the industrial structure and can't answer the relationship between economic growth and industrial structure evolution. The Path-dependent theory showed the dependence phenomenon in the transformation of technology and institution from the angle of technical and institutional changes. It believed that path- dependence lead to systemic development lock, but it is feeble to interpret the facts of the inevitably emergence and reversible recession of the old industrial bases, and it is devoid of efficacious solutions for this inefficient state. The "Resource cursed" hypothesis proved the inverse relationship between resource abundance and economic growth rate, and thought "Dutch disease"(based on the huge resources proceeds), rent-seeking behavior, loss of the ability in technological innovation, thought corruption as the causes of economic recession, however, it couldn't explain the fact why the old industrial bases began to decline from resources industry and why they declined so rapidly. The life-cycle theory studied from the perspective of motion of productive factors the process from young to middle-aged to aged in manufacturing industry, however, this theory was only a summarize of the recession phenomena of the old industrial bases, it couldn't be able to explain the inherent nature of recession. Analysis showed that the above theories couldn't fully explain the question why the old industrial bases declined.Part III: On the previous theories, we presented life cycle theory of industrial technology system, through which we can explain the relationship between the phenomena of the old industrial bases'recession and the industrial technology system. On the one hand, the paper introduces the concept and attributes of the industrial technology system. We name the form of production and application in technology - the system of industrial technology, industrial technology system. Industrial technology system includes three levels: source technology, trunk technology, affiliated technology. On the other hand, it establishes the life cycle theory of industrial technology system. Life cycle of industrial technology system means in the process of development of industrial technology system, it will experience a sequenced procedure composed of"emergence– shape– maturate– recession", like a living organism. On this basis, it analyses the attributes and characteristics of each stage of the life cycle in industrial technology system, as well as the root of it and influencing factors. Finally, we use the theory to construe the recession mechanism of the old industrial bases. Because of recession of source technology, resource and environmental restriction, changes in demand as well as the impact of the third industrial revolution, etc, the industrial technology system of the old industrial bases now is in the recession period of it's life cycle. By viewing the intrinsic recession mechanisms of the old industrial bases, we concluded that the industrial technology system of the old industrial bases is in it's recession stage, which is the underlying cause of slow economic growth, high proportion of the traditional industries, industry ratio imbalance, high unemployment rate, resource depletion and serious environmental pollution, etc. of the old industrial bases.Part IV: Introduction of transformation and analysis of effectiveness of the world's major old industrial bases. In this section, we firstly introduce and analyze detailedly the transformation measures of the old industrial bases such as Germany's Ruhr, Lorraine in France, the United Kingdom's central region, Kyushu in Japan and the central and western region of the United States. Secondly, on a criterion of economic strength, unemployment rate, environmental changes and the intending economic potential, we evaluated the transformation effects of the above old industrial bases to testify the effects of our theory in transforming the old industrial bases. Finally, a comparative analysis about the similarities and differences between the measures of world's major old industrial bases transforming are carried out.Part V: Discussion of the recession mechanism of the old industrial bases in northeast China. First, a detailed recession history and performance of the old industrial bases in northeast China is presented. Second, the relations among the recession phenomena are analyzed. In the end, we get a conclusion that all the phenomena such as slow economic growth, high unemployment rate, traditional industries in recession, increasing depletion of natural resources, environment continuing to worsen, industry ratio imbalance, low levels of opening up, as well as too large proportion of state-owned economy are resulted from the industrial technology system, they are the direct result for industrial technology system is in it's own life-cycle recession stage.Part VI: Based on the previous theoretical analysis, a proposal of transformation of the old industrial bases in northeast China is raised. We must follow the principle of sustainable development, system integrity and adjusting measures to local conditions in the process of transformation. In the strategic direction, the long-term goal is to seize the opportunity of the fourth industrial revolution to reform the existing system of the heavy chemical industry technology system; in the short-term strategy, we should utilize the achievements of the third industrial revolution to adjust the existing industrial technology system. During concretely implementation, we suggest the government should fully play the leading role, steer the declining industries out of the way step by step, develop new alternative industries, strengthen the transformation of scientific and technological achievements with combination of industries, universities and governments, strengthen the environmental and infrastructure construction to progressive realization of industrial technology system changes.