Surpassing Path In The Economic Growth Process Of Developing Countries Under The Industrial Globalization Background

As more and more countries are gradually involved into the global system of division, companies among developing countries and developed countries are united as global value chains. This essay analyzes the growth path of developing countries on the background of the global system of division.Unlike existing endogenous growth theory we make two different assumptions to analyze the growth path of developing countries efficiently on the background of the global system of division. First of all this essay abandons the dichotomy between the capital and technology and built a model of technological upgrading directed by demand on the basis of the Schumpeterian Creative Destruction. Secondly market subdivision among the developed countries and developing countries is verified from the supply side and demand side. Specifically on the supply side data from published companies is utilized to prove the existence of the investment-specific technological gaps and market subdivision. On the demand side data from WIOD and EU KLEMS are analyzed to describe the phenomenon that the process of the market integration lags behind the production integration as the evidence of market subdivision. On the basis of assumptions above this essay analyzes the growth path of developing countries on the background of the global system of division by the model of technological upgrading directed by demand. The path selection of the growth of the developing countries on the background of the global system of division is the main focus.In the model developing countries are classified as emerging markets and mature markets. Compared with the emerging markets, mature markets get much higher per-capita income and living standard. With inserting into the global system of division emerging markets gradually turn to mature markets by enhancing their product quality. On the basis focusing on growth of the developing countries on the background of the global system of division this essay gets following conclusions.First holding the generation of technology the per-capita income of people in developing countries and developed countries are fixed value when the world market consisted of companies from developing countries and developed countries gets its equilibrium. Developing countries, in comparison with developed countries, get shorter service life of equipment and higher rate of investment-specific technological change.Second when the world market involves more companies from emerging markets the equilibrium level of the per-capita income of people in developed countries will decline such that the obstacle of surpassing path in the economic growth process of developing countries turns to go down. By contrast when the world market involves more companies from mature markets the equilibrium level of the per-capita income of people in developed countries will increase such that the obstacle of surpassing path in the economic growth process of developing countries turns to rise up. This model reaches three recommendations for the growth of the developing countries.Firstly governments of the developing countries should prioritize resources to key industries in order to guarantee a surpassing path in the economic growth process.Secondly the key industries mean the industries with more general purpose technology.Finally government of the developing countries should lead the R&D activity so as to provide efficient technology path for commercial use.Specifically the structure of this research is sketched as following:Chapter 1 is the introduction which presents the background, significance, related concepts and main content of the research.In Chapter 2 based on the concept of embodied technical change this paper builds a brand-new model depicting demand-oriented economic growth driven by disruptive innovation. Technological discontinuity (continuity) is produced by heterogenization (homogenization) of demand which is led by change of pattern of income distribution. In this model economic growth which features both demand-driven and supply-driven turns out as an endogenous circulation.Data from US Department of Labor and studies of Investment Specific Technical Change give empirical evidence. At the beginning of given technology generation the disruptive innovation dominates the market and reallocation of resources happened outside the companies. At the end of given technology generation the sustaining innovation dominates the market and reallocation of resources happened inside the companies.After that Chapter 3 and Chapter 4 focus on market subdivision under the background of global system of division. Chapter 3 considers the investment-specific technological gap as the supply-side evidence of market subdivision. Chapter 4 considers the income inequality between developed countries and developing countries as the demand-side evidence of market subdivision.Along with the research of Papanikolaou the rate of investment-specific technology change is measured both in the macro-level and firm level and mixed with the data of R&D and export of published companies to prove the existence of the investment-specific technology gap between China and foreign countries in Chapter 3. Compared with the developed countries China is still lagged behind in terms of investment-specific technology change. When inserted into the global system of division companies producing consumer goods can take use of the foreign equipment with high efficiency to improve their productivity while companies producing capital goods must compete with foreign companies with high efficiency. The investment-specific technology gap means that companies from developed countries and developing countries participate in the differentiated markets rather than a united market.According different roles in the accumulation of factor endowment and enhancement of factor productivity, international trade is divided into division mode and transfer mode in Chapter 4. In the division mode firms are inserted into global value chains by virtue of their factor endowment while the opportunities of upgrading to the core production chains are blocked. In the transfer mode factors in the emerging countries are accumulated and utilized by the advanced technologies of the lead firms. On the basis Chapter 4 analyzes how international trade influence national competitive edge on the basis of the data from EU KLEMS and WIOD in a convergence framework. Whatever the mode of international trade expansion of the global system of division cannot narrow the income gap between developed countries and developing countries. The phenomenon that the process of market integration lags behind the process of production integration creates the chance for developing countries to realize the surpassing path.Chapter 5 uses the model of technological upgrading directed by demand to analyze the growth path of developing countries on the background of the global system of division. In this model the low per-capita income limit the external demand of the emerging markets which experience long-term trade surplus. As the increase of per-capita income developing countries transform from emerging markets to mature markets. During the transformation the trade surplus is likely to diminish or even reverse. When the world market is in equilibrium companies from mature markets get the level of their profit fixed and shorter service life of equipment and higher rate of investment-specific technological change. Only investment-specific technological advance can lead developing countries to the surpassing path.