The Impact Of Institutional Quality On The Division Of Labor In Value Chain

With the continuous evolution of the information and communication revolution and the rapid development of logistics and transportation technologies in the world since the 1980 s,the production process of products has gradually expanded to a global scale.The division of labor in the global value chain has gradually taken shape.For developing countries,relying on their comparative advantages to participate in the global value chain,they can share the benefits of globalization by learning and transforming the advanced technologies of developed countries.However,in the international division of labor production system,if China only relies on the processing and manufacturing link,with the weak competition of “low-end-embedding”,it not only obtains a small value-added benefit in the distribution of labor division,but also faces the risk of “lock-in at the low end of the value chain ".With the advancement of global value chain research,more and more scholars have realized that in addition to factors such as overall economic development,capital and labor resources,scientific and technological level,institutional quality will also have an impact on value-added trade.First of all,this paper sorts out the relevant literature from the three aspects of China’s low-end global value chain,institutional quality and trade division,institutional quality and value chain,and summarizes them.Then,this article elaborates the concept of value chain,and further introduces the global value chain(GVC)and national value chain(NVC)according to the transnational nature of the production stage.It focuses on the quantitative measurement of the value chain,which is a key point and difficulty in the study of this paper.It also describes the concept of institution,institutional quality and the measurement of institutional quality.Secondly,this paper analyzes the influence mechanism of institutional quality on the division of labor value chain from both direct and indirect aspects.In terms of the direct mechanism,an effective property rights system is conducive to the formation of comparative advantages.The contract implementation system provides guarantees for the realization of trade interests.A good political system is conducive to reducing macroscopic transaction costs.About indirect mechanisms,the institution affects the division of labor in the value chain through human capital,transaction costs,technology and Innovation.Next,it is the empirical test that the quality of the system affects the division of labor in the value chain.From the perspective of global value chain and national value chain,this paper constructs relevant models,measures the relationship between the institutional quality and the division status of the value chain,and conducts relevant regression analysis.Finally,this paper concludes that the improvement of the institutional quality will reduce transaction friction and reduce the average transaction cost of the enterprise’s unit product.The more the institution dependence that is needed in the upstream production in the value chain,in other words,the stronger the institutional quality of a country or region,the more likely it is to participate in the production of upstream links in the value chain.On the basis of the previous theoretical analysis and empirical results,this paper proposes countermeasures and suggestions: strengthen the construction of property rights system and macro-political system;encourage enterprises to technological innovation;effectively use foreign investment and strengthen technology spillovers.