Opening Up And Industry Upgrading

Promoting industry transformation and upgrading by Opening up has been one of the most important topics on discussion of Switching Economic Development Mode in China. Previous research on this topic could be sorted into two categories. One is about the relationship between Opening up and change of industry structure or efficiency improvement from the macro-perspective. The other focused on specific industry development from foreign trade and FDI separately. Thus the objective of this dissertation is to explore the effect of Opening up on specific industry upgrading from a comprehensive perspective in the case of automotive industry.With the assumption of industry upgrading and technological changes are used as synonymous, a comprehensive framework was advanced to interpret the mechanism which Opening up spreads its effect on specific industry upgrading from the flow of technology, commodity and capital, i.e. technology transfer and technology spillover. Positive or negative effect depends on the pattern of opening up.As for China' automotive industry, firstly the history development and efficiency change are briefly described. Then the characteristics of opening up are fully studied in the pattern of foreign trade, FDI and ODI. It shows that technology change is the main drive for the improvement of TFP and the influence of opening up on automotive industry upgrading are distinct among international trade, FDI and ODI.Empirical analysis used Factor productivity index and R&D intensity as the indicator of industry upgrading. Five sub-industries, i.e. Vehicles, automotive modifications, motorcycles, vehicle engines, components and parts are complied to build a balanced panel data. Then with the varying coefficient model under fixed effects, the influence of opening up on automotive industry upgrading is carefully examined. Result shows that, export of automotive industry contributes more to industry upgrading than FDI, i.e.'going out'has a better performance over'bringing in'. Ultimately, corresponding policies are recommended.