Contract Quality And "B&R" National Industrial Chain Improvement Research

The research on the relationship between incomplete contract and international trade has become a momentous theoretical issue. In the institutional economics, as the research of transaction cost and property rights moves along, the theory of incomplete contract has developed. The incomplete contract leads to that: Specific investment can’t be written in contract in advance, and the income distribution are only through "renegotiation", and this renegotiation leads to bilateral lock. In addition, because of people’s limited rationality, incomplete information and uncertainty transaction make that the cost of clearing all special power is high, and formulating complete contract is impossible. There is often incomplete contract. So we define that when the contract enforcement of a country is low, and enforcement takes longer and the cost is higher, and the court can’t clear the special power in the contract, we think that the contract quality of a country is low, otherwise we think the contract quality is high. In short, incomplete contract means the low quality of the contract.Recently under the push of "B&R" strategy, free trade strategy, and the interconnectivity, our labor-intensive industry and capital-intensive industry are expected to be migrated to the surrounding and countries along the "B&R", and drive other countries’industrial upgrading and industrialization level, to complete the reconstruction of our global value chain. In this paper, under the background of "B&R" strategy, we research on the ascension of the country’s industrial chain, and the concept of industry chain ascension can be divided into two levels:the first is that the total exports added value of a country is increasing; on the other hand is that achieving promotion from the industrial chain of low value-added to the high value-added. In the various factors that affect industrial chain ascension, we focus on a country’s institutional environment, especially the contract enforcement, namely the quality of the contract.At the theories part, with reference to the traditional contract as a source of comparative advantage theory, and combined with the latest industry chain estimating measure, we measure the industry added value of exports of domestic, and then build domestic added value of exports model. The derivation of the model train of thought as follows:first of all, the quality of contract influences the price of special inputs, then affects the cost the final product, and lead the differences of one country export volume. Then the higher the quality of the contract, the more of country’s total exports. Second, using the input-output tables between countries to divide the added value of exports to domestic and foreign parts.This paper considers the added value of domestic parts, and we put forward the hypothesis 1:contract quality influences a country’s domestic added value of exports. According to Nunn (2007),who measures the intensity of contract found that technology-intensive industry is easily depending on contract. so we put forward the hypothesis 2:contract quality has higher influences on techno logy-intensive industry than other industries. Namely contract quality has a greater influence on high added value of the chain than the low added value.In the part of the positive analysis, first we carry on the statistical analysis of contract quality, and we use china as example to analysis the trend. Then, using the Matlab software calculates countries 35 industry added value between 1995 and 2011, by classifying aggregation method, we get resources industry’s domestic added value of exports and manufacturing and service industries’ domestic added value of exports, on the basis we carry on comparative analysis. Second, we think about both the influencing factors of industrial chain and related empirical studies, and we select the control variable and build the empirical model, and then we respectively use fixed effect model and system GMM method to estimate the equation. And we respectively analyze the relationship between contract quality and the total domestic added value of exports and the contract quality and classification of industrial domestic added value of exports. At the same time we classify the sample countries to verify the robustness of the model. The empirical results show that:Firstly, the good contract quality, its export has a high domestic added value. Secondly, for the resources industry, the quality contract has no significant impact; for manufacturing, the contract quality has significant effect on the domestic added value of exports, and the influence of the contract quality on labor-intensive, capital-intensive and technology-intensive manufacturing gradually increase; for services, the contract quality are significant, and the influence of the contract quality on labor-intensive, capital-intensive and techno logy-intensive service industry gradually increase. Thirdly, regional test results show that the influence of contract quality is different across different areas.Finally, this paper combine the present situation of contract quality, the influence factors of industrial chain ascension with the empirical analysis conclusion, we put forward policy suggestions from the improvement of institutional environment, especially the quality of contract, in order to promote the " B&R " countries’industrial chain.