The Impact Of International Trade On Industrial Location

Time and space being closely linked, the economic activities not only are in time serials but also have regional spatial structures. With the growth of the global population and the rise of the consumption levels, the human race wants more from the spatial resources. Besides factors such as capital, labor, resource and technology, the economy of a country or a region who desires a better development needs a reasonable spatial distribution and creates an environment to boost competition which can help to make full use of scarce spatial resources. This fact requires economists pay more attention on the space dimension and strengthen researches of spatial distribution when it concerns about time dimension.Under the condition of the increasing distinctness of the economic globalization, international trade has an increasingly significant impact on the spatial economic development of a country or a region with a gradually obvious change on its industrial lacation at the same time. So, it’s necessary to studying industrial location with international trade.The augment on distances of institutions, cultures, economies and spaces in international trade exacerbates information asymmetry between economic entities, which will increase their cost of information search. Also the long-distance transport will demand economic entities pay for higher transportation costs. This dissertation will take a comprehensive consideration of the costs of transport and information search and deeply analyze the impact of international trade on industrial lacation. Based on the sorting and retrospect on the related theories of international trade and industrial location, and following the research ideas from micro to medium-view, from general to specific and from theoretic to empirical, this dissertation mainly studies the impacts of international trade on the locations of a individual firm and firm groups, and on industrial agglomeration and industrial diffusion and finally on the distribution of three industries. Meanwhile, it uses the Chinese data of international trade and industrial development since 1978 to do an empirical research and finally gives conclusions, policy implications and research prospects of the study.The impacts of international trade on industrial lacation are in all orientation, multi-level and multi-angle. The volume, structure, form, contents and policies of international trade have different impacts on industrial lacation. The absolute and relative volumes, the industrial and regional structures, the intra-industry and inter-industry trades in form, the trades of commodity, service, technology and capital flows in contents, the free trade and protection trade policies will work differently. When making impacts on industrial lacation, different aspects of international trade have different affecting mechanisms, affecting ways and operating mechanisms, which make the affecting results industrial lacation gains different and finally leads to a more complicated influence on industrial lacation.In general, the underlying cause that makes firms change their site selection strategies is that they have to pay higher costs of transport and information search in the conduct of international trade. The costs of information search and transport costs interact with each other and result in higher additional costs of international trade. The augment on the distances of cultures, institutions, economies and spaces exacerbates the information asymmetry in international trade, and serious information asymmetry increases risks in long-distance transports. To ensure the safety of products arriving at their destination, firms have to take more safety precautions to improve the safety factor, which causes a final situation that more information asymmetry exists in the long-distance transports and asks for higher transportation costs. At this time, if the firms change their location reduces the information asymmetry and lowers their transportation costs; then they may change their location. Targeted for their profits maximized, firms will choose to decide whether to change their locations after a cost-income analysis. If the expected net profit of changing its location is greater than that of not changes, the firm will re-locate itself. If not, the firm will remain to operate on its previous location. One firm changes its location will make an influence on other firms, and some will change regional economic development environment gradually with an impact on the operating environment of the remaining firms or even make them change their locations too. Meanwhile, international trade will make an effect on the location of firm group.International trade affects not only the location decisions of firms but also industrial agglomeration and industrial diffusion. When location-choosing action of the firm changes with international trade, the impact that international trade makes on industrial lacation begins to emerge on the middle-level of industry. When costs of transport and information search remain low, international trade will lead to industrial agglomeration.But international trade will boost industrial diffusion when costs remain high. This dissertation argues that from the perspective of industrial agglomeration, it will acquire agglomerated economies, which will partially compensate for the low costs of transport and information search and finally help to maintain the competitive advantages of industrial agglomeration. At the same time, because of the high economic density in the area of industrial agglomeration and more spatial competition, the firms inside will reveal their strengths by way of industrial agglomeration to spread information to upstream firms and downstream firms and customers, which will help to reduce information asymmetry. Industrial diffusion can directly curtail distance and lower costs of transport and information search. Additionally, international trade can also affect location choice and scale of industrial agglomeration and the life cycle of industrial agglomeration and diffusion.The main reason why international trade makes different influences on the location of different industries is that different industries have their characteristics from the perspective of industry itself and have different positions and roles in the view of international trade. In the case of the three industries, the primary industry passively adapts its location to international trade more or less, and there is a little effect of international trade on the location of the primary industry. This is mainly because the development of the primary industry depends more on natural conditions and its room to survive and develop has been occupied by the manufacturing sectors whose products can have higher profitability than the primary products, which make each country pay more attention the development of manufacturing and profit through international trade. Reversely, the secondary industry actively adapts its location to international trade to further reduce the costs of transport and information search which highlights its comparative advantages. Meanwhile, the impact of international trade on location of the secondary industry is more significant. The location of the tertiary industry changes conditionally according to the international trade. This is because the tertiary industry has a strong sense of service and has many products untradeable. It will be consistent with the rational principles when location of the tertiary industry is changed only after locations of the primary and secondary industries have been changed significantly by international trade. Otherwise, a better choice is to pay more attention to the real situations in the own land and to bring its service function into play when locations of industries take place.International trade has different influences on industrial lacation in different regions, such as the coastal and inland areas, and the areas of high-trade dependency and low-trade dependency. In contrast, international trade has a more significant impact on the coastal area and the area with high-trade dependency. In this dissertation, by contrast with the inland area, the coastal area not only has lower transport cost that strengthens its advantages in the economic development but also has a advantage in the cost of information search which the inland area cannot have, therefore international trade has a more significant impact on industrial lacation of the coastal area. Compared with the area with low-trade dependency, international trade has a high weight in the total economic volume of the area with high-trade dependency and has a more obvious impact on the industrial lacation.The study shows that, as an open economy, to optimization of industrial lacation in a country or a region should take full consideration of the impacts of international trade. To take full advantage of international trade to optimize industrial lacation of a country or a region has, some efforts should be made in the policy constitution and implementation.The implementation of industrial lacation policy should pay close attention to the global economic development, give full consideration of the position in the international division of labor that a country has and its development level, pay attention to the use of the economies of scale, strengthen environment protection and finally seek a reasonable industrial lacation.Furthermore, the domestic and international markets and resources should be made full use of with the domestic economic structure adjusted and industrial lacation optimized. And the increasing construction of infrastructure and the expedite flows of information channels along with more international exchanges help to reduce variety of distances and transaction costs the economic entities take.