Impacts Of Value Chain Division Of Labor On Regional Economic Disparities In China

With the continuous development of globalization and international division of labor,the upgrading of global value chain(GVC)has become an issue of national strategy level.Since the reform and opening up,China's domestic division of labor system formed by the advantage of lowend factor endowment has been integrated into the global division of labor network.By taking“learning by doing” and competitive imitation strategies,China has realized economic take-off and rapid industrialization.The technical content and technical complexity of China's export products have also far exceeded that of the same income countries,even close to the level of high-income countries.However,due to excessive dependence on comparative advantages such as cheap labor and natural resources to participate in vertical division of labor,combined with factors such as “technical blockade”,“market restrictions” and “trade barriers”,domestic original equipment manufacturers are“captured” in GVC with low added value,low innovation ability thus cannot jump to the higher position of the value chain.The 19 th National Congress of the Communist Party of China held on October 18,2017 stressed that efforts should be made to promote China's industry to move toward the high-end of GVC and accelerate the cultivation of some advanced manufacturing industry clusters with world competitiveness.Meanwhile,it clearly pointed out that some outstanding problems of inadequate regional economic development have not yet been resolved,so did the large gaps in income distribution between regions.Realizing the coordinated development of regional economy is still the main theme of China's future development.Actually,as a large country in transition,China's imbalance in regional economic development has become increasingly prominent,and the widening gap between the rich and the poor will exacerbate the social conflicts and instability.From the integration of international specialization and domestic division of labor of different regions,it is not difficult to find that the lack of an effective joint mechanism between GVC and the national value chain(NVC)would hinder the coordinated development of the regional economy.Taking the developed coastal areas in the east as an example,their low value-added GVC embedding model is mainly based on the premise of cheap resources and labor supply from the less developed regions of the central and western regions.The division of labor with the central and western regions has been limited to the supply of primary production factors.The eastern regions do not perform well the function of the two-passer between GVC and NVC.As a result,they did not only construct a longterm mechanism for specialized division of labor and economic growth,but also limits their economic diffusion effects and technology spillover effects,which is not conducive to less developed regions being free from the poverty traps and getting ride of low-end technology paths.This will,to a certain extent,exacerbate regional economic disparities and imbalances,leaving China at risk of falling into the “middle income trap”.At present,“anti-globalization” and the prevalence of trade protectionism,together with rising raw materials and labor costs and many other unfavorable factors,China's lowcost comparative advantage will be unsustainable,making it urgent to accelerate the value chain upgrade process,and explore a feasible path to coordinate regional economic differences in China from the perspective of the dual value chain of division of labor.Therefore,we can not help to think,how does the division of labor in NVC and GVC affect China's regional economic disparities? How to promote the effective joint and interaction between GVC and NVC? How to coordinate regional economic differences through the joint and interaction between GVC and NVC?Thinking and exploring the above questions is an important starting point of our research.Based on the new economic geography theoretical framework proposed by Krugman,this paper attempts to provide new ideas and countermeasures for coordinating China's regional disparity and cracking the low-end lock of the value chain based on the impact of the value chain division on regional economic differences.Specifically,the logical of this paper is to first sort out and analyze the existing related research and theory,and then figure out the economic differences between different regions since the reform and opening up in China,as well as the situation and evolution in the division of labor between NVC and GVC.On the basis of comprehensive and systematic measurement and grasp,combining theoretical analysis with empirical analysis,this paper examines the impact and mechanism of the value chain division of labor at home and abroad on regional economic differences,and the potential channels that the interaction between GVC and NVC coordinate regional disparities,and finally propose some countermeasures.This research paper mainly includes eight chapters.The main contents and conclusions of each chapter are briefly summarized as follows.The first chapter is the introduction.It mainly introduces the relevant background,theoretical and practical significance,research framework,main methods,possible innovations and deficiencies of this research,and then propose several further research directions accordingly.The second chapter is the definition of concepts and the literature review.In this chapter,we first define the research domain of the regional economic differences,GVC,and NVC based on the existing literature,and then use Cite Space software to conduct bibliometric analysis,and finally summarize and review the related literature from regional economic disparities,value chain division,and dual value chain joint and interaction.The third chapter is about the typical facts about the current situation of economic differences in various regions of China.This chapter measures the evolution of regional economic differences in China since the reform and opening up,and combines the nighttime lighting data to examine the spatial distribution and regional differences of China's economic activities.We find that the per capita GDP difference between provinces and cities show a trend of decreasing first,then rising and then decreasing.The economic gaps in most provinces have reduced to various degrees.The measurement results using nighttime lighting data are consistent with official statistics.The fourth chapter is the measurement of the participation of GVC and NVC in different regions.Based on the theoretical framework and decomposition logic of the existing GVC division of labor,this chapter integrates the inter-provincial input-output tables of China into the world input-output tables to examine the status and evolution of the division of labor in the dual value chain in China.Studies shows that the degree of participation in NVC of some eastern provinces has decreased significantly,while the degree of participation in GVC has increased.The scale of inter-provincial intermediate goods trade has expanded and the division of labor has become increasingly close.The rate of return on domestic trade added value is significantly higher than that of foreign trade.The production chain in some regions continues to expand,while the traditional advantageous industries represented by the textile industry are still in the stage of meager profit operation.The fifth chapter is about the empirical study of NVC affecting regional economic differences.This chapter mainly constructs the theoretical framework based on the new economic geography theory and the international division of labor perspective,and examines the impact and mechanism of NVC on regional economic differences through the econometric model.The results show that there is an inverted U-shaped relationship between the simple NVC division of labor and regional economic differences.The mediation effect of GVC division on the regional economic differences of NVC is uncertain.The contribution of simple NVC division of labor to GDP growth rate tends to be regional and industrial bias.The sixth chapter is the empirical test of the GVC division of labor affecting the regional economic differences.Based on the mechanism analysis of the impacts of the intermediate product linkage on the regional income gap under the GVC framework,this chapter measures the forward and backward linkage index of intermediate products in various regions of China,and then examines the impacts of intermediate product linkage on regional disparity and its mechanism.The results reveal that the forward linkage of intermediate products weakens the economic agglomeration effect,which is conducive to improving the productivity of underdeveloped regions,thereby narrowing the regional gap.The backward linkage of intermediate products strengthens the local market effect,thus exacerbates the distortion of the factor market,and then expands the region income differences.The seventh chapter uncovers the path of the GVC and NVC interaction coordinating regional economic differences.Based on the theory of income distribution of international division of labor,this chapter explores the path of the dual value chain interaction coordinating the regional economic differences from two dimensions of direct effects and indirect effects,and proposes relevant hypotheses and then carries on empirical tests.The results show that technological advancement and continuous improvement of infrastructure are conducive to promoting the effective joint of GVC and NVC,and the coordinated interaction of dual value chains is beneficial to optimize resource allocation,reduce homogenous competition,and narrow regional gaps.The eighth chapter is the main conclusions and countermeasures.Based on the research results of this paper,some policy recommendations are proposed from the perspectives of deepening NVC division of labor system,optimizing GVC intermediate product linkage,and promoting dual value chain joint to coordinating regional economic disparities.All in all,compared with the existing literature,this paper on the impacts of value chain division of labor on regional economic disparities has following several innovations: Firstly,the regional economic differences and value flows are included in the theoretical framework of the multi-regional input-output model.At the same time,the potential mechanisms of both GVC and NVC division of labor and the effects of their joint and interaction on regional economic differences are taken into consideration,and then utilize existing data for statistical analysis and empirical testing.This is different from extant research that only considers NVC or only focuses on GVC.Secondly,the general classification of "foreign(or overseas)" or "domestic" in the existing research is further subdivided into various provinces and cities and major trading partner countries,in order to grasp the degree of integration and status evolution of different provinces and cities in the GVC and NVC division of labor system more accurately and precisely.Thirdly,this paper is based on the “low-end locking” dilemma in the value chain and the actual contradiction of domestic regional imbalanced development.It proposes to establish an effective joint mechanism between GVC and NVC to achieve the coordinated development of regional economy,rather than only pay attention to causality and ignore the actual problems in the previous research.