An Empirical Study On The Effect Of Reverse Offshoring On TFP Of Manufacturing Industry

“Increasing total factor productivity” was first written in reports of the 19 th National Congress of the Communist Party of China.According to the deploy in the report,the speed of Chinese economic changes from high speed to high quality.“Increasing total factor productivity” is the core of high quality development and also the main thread of building new time economic revolution.It is need us to find the key power point to find a solution scientifically.Academic word thinks if China wants to increase its total factor productivity(TFP)and realize high quality development,it must blend in international work-divided system then to speed up transformation and upgrading in order to climb world value chain.International outsourcing is an important realization form of international division of labor.Existing empirical evidence indicates that traditional international outsourcing is beneficial for the contractee(developed countries)but bad for outsourcee(developing countries)to improve their TFP.Traditional international outsourcing is regarded as a game only for developing countries.They occupies the high point of value chain and the developing countries always be locked in the low side of value chain.This is a theoretical and realistic problem in front of us.In the turn of this century,a new international outsourcing form(reverse offshoring)rising quietly,its presence makes developing countries break through the lock of undertaking low-end and to participate in the international division of labor,access to global resources and initiate contracts at the upper end.It needs factual basis to answer whether the reverse offshoring can improve the TFP of China.Based on this,this paper tries to analyze the relation between the TFP in manufacturing and reverse offshoring by using world input-output tables from 2000-2014.In addition,this paper also would like to study the affect difference in different manufacturing and different patterns of reverse offshoring and analyze the mechanism of action in reverse offshoring promoting the TFP of manufacturing in order to propose policy proposal for china to improve its TFP.The empirical results in this paper show that there is significance positive correlation between reverse offshoring index and the variability index in manufacturing TFP.Moreover,reverse offshoring can increase Chinese TFP significantly but there is difference between different industries in terms of impact effect.From the total sample regression,the estimate coefficients of reverse offshoring are significant in 1% significant level.When reverse offshoring increase 1% the variability index of manufacturing TFP increases 1.25% that means reverse offshoring can promote Chinese TFP in the mass.From the sub-sector sample,reverse offshoring affects labour concentrated industry,capital concentrated industry and technology-intensive industry significantly in 10% level that means reverse offshoring promote every manufacturing industry significantly.Reverse offshoring can be divided into reverse information technology outsourcing,reverse process outsourcing and reverse knowledge process outsourcing.The empirical result shows that reverse information technology outsourcing and reverse knowledge process outsourcing can increase the TFP significantly but reverse process outsourcing will hinder the increase of TFP.This paper divides TFP into technical progress and technical efficiency then studies them respectively.The results indicate that reverse information technology outsourcing and reverse knowledge process outsourcing have positive effect on growth rate of technological progress.But reverse process outsourcing has negative effect on growth rate of technological progress.The result of this research not only finds the reason of different effect from these three kinds of reverse offshoring but also change experience-based judgment.This paper studies the influence mechanism of high-level factor acquisition capability,ability to learn high-end knowledge and high-end resource integration capability in terms of increasing TFP by threshold feature analysis.The result shows that both of high-end resource integration capability and ability to learn high-end knowledge have single threshold effect and less than the interval range of threshold value meanwhile reverse offshoring index and TFP change index show significant negative correlation that means reverse offshoring has inhibiting effect on TFP.On the contrary,in the range above the threshold value,there is a significant positive correlation between reverse offshoring index and TFP change index that means reserve offshoring has auxo-action for TFP.Unlike ability to learn high-end knowledge and high-end resource integration capability only have single threshold value,high-level factor acquisition capability has two threshold values.More critically,no matter in which threshold range,reverse offshoring has positive effect on TFP and this positive effect increases in turn that means there is no threshold effect in high-level factor acquisition capability but the higher the acquisition capacity of high factors,the stronger the role of reverse offshoring to improve TFP.The paper thinks that reserve offshoring is a new strategic path for developing countries to break the lock of value chain and increase its TFP.Chinese government should encourage native enterprises to develop reserve offshoring and guide them to use foreign advanced production factors actively participate in the global competition and improve the ability of local enterprises to acquire high-level elements,learn high-end knowledge and integrate high-end resources.Moreover,Chinese enterprise should make full use of the advantage of domestic broad market scale and deep development space of industrial chain to force the enterprises in developed countries cooperate with China in key technology areas or open part of the core code meanwhile achieving advanced resource elements to increase TFP.