Study On The Effects Of Market Integration On Regional Specialization

Under the background of economic globalization, countries or regions areincreasingly becoming an integral part of the world market. By making up thedeficiency from surplus each other, each regions actively or passively involved in theinternational distribution and cooperation. Since they engaged in specialized productionaccording to their comparative advantage, an efficient global economy system is builtup. As an important component of the world economy, China has been focusing onpromoting the bringing in and going out strategy in the opening process, andactively participated in the distribution and cooperation in the whole world. After30years of development, China has played an important role in the global division system.However, what we should pay attention to is that China is still in the lower end of thechain of international division, by importing high value-added products and exportingprimary processed products. M oreover, the overall level of specialization is low and theeconomic structure needs upgrading. These are not conducive to China’s transformationfrom economic power to the economic superpower. At the same time, there is littleincentive to promote China’s specialization.On the one hand,the quality of openingtothe outside world is not high; on the other hand, opening to the interior is restricted bylocal protection. At present, China’s economy is in a key transition period, thus, themain purpose of this paper is to explore the impact of market integration on regionalspecialization.Firstly, the article analyzes the development of market integration since themarket-oriented reform of China, and discusses the development process andcharacteristics of regional specialization in China, seeking to explore the relationshipbetween market integration and regional specialization. Secondly, according to thetraditional trade theory, the new trade theory and the new economic geography theory,we construct a framework of how market integration affects regional specializationfrom the angle of regional specialization formation. Finally, we select six influencingfactors(including market integration), and use panel measurement methods to test therelationship between market integration and regional specialization. The results ofnational sample show that: market integration can significantly promote the professional development of the region. But the external market integration and internalmarket integration is in a substitute relation, the market integration can not fully takeeffect. The results of different regions sample show that: specialization development ofthe eastern region needs more open internal market, and needs focusing on upgradingthe depth of opening; specialization development of the central and western regionswill experience a decline, which is necessary. In this stage, the central region shouldbreak the local protectionism, encourage mutual exchanges within the region, andstimulate the opening to the outside by opening to the interior. Western region shouldstrengthen the local infrastructure construction, perfect market mechanism and improvethe degree of market growth.Since we have already separately analyzed the different effect of the marketintegration on regional specialization, this paper presents some policyrecommendations accordingly, to meet the needs that to overall consider the domesticand foreign market, to balance the domestic and overseas demand, and to stimulateChina’s economic restructuring and upgrading.