International Outsourcing And Its Impact On Industrial Competitiveness

Since 1980s, with the development of economic globalization and the changes of production, more and more enterprises gain from the process. They reduce enterprise cost and raise efficiency by entrusting the high cost of internal and low effectiveness business to the foreign enterprises with contract, which is one form of international outsourcing, and international outsourcing is continuously affecting one country's industrial competitiveness. This dissertation focuses on the effect of outsourcing on the competitiveness of the industry in China from the perspective of eontracting states.This dissertation focuses effect of international outsourcing on the industrial competitiveness. Firstly, this dissertation describes the definition, classification and the methods of measure international outsourcing. Then it analyzes the channels and mechanism of how international outsourcing influences industrial competitiveness:take full advantage of comparative advantage effect by focusing production which has comparative advantage; the effect of technological overflow by importing high quality inputs; the scale economies effect to reduce the cost of product; importing of diverse intermediate products can enhance efficiency through the effect of increasing variety of inputs; the effect of improving the status of international industrial chains by technology overflow.Then, on the basis of comprehensive literatures, this dissertation uses three methods estimating material and services outsourcing ratio of China's 36 industrial sectors in 1997, 2002 and 2007, then investigates the quality of the three methods through the Shift-Share method. The results show that different methods will lead to a big difference. Three methods all show an upward trend of China's industrial sector outsourcing ratio during 1997-2007, and the growth rate of service outsourcing is higher than material outsourcing; structural changes have a greater impact on the material outsourcing ratio than the services outsourcing ratio.Thirdly, this dissertation analyzes the dynamic evolution process of the trade competitiveness of industries in China during 1996-2008.The conclusion shows that:trade competitiveness of labor-intensive industries are stronger than capital-intensive industries, and capital technology-intensive industries are the lowest. From the perspective of change trend, the trade competitiveness of capital technology-intensive industries increases fastest. Then the dissertation establishes the econometric model to test the effect of outsourcing on trade competitiveness. The results shows that:Material outsourcing and service outsourcing both have an obvious positive role in promoting the trade competitiveness of China, and the service outsourcing shows a bigger effect; Characteristics of industry will influence the effect of international outsourcing. Outsourcing will have greater effect on competiveness in the larger scale industry and higher proportion of foreign investment of an industry.Fourthly, the dissertation analyzes the R&D investment and innovation output of 35 industries in China during 1996-2008. The conclusion shows that both R&D investment and innovation output show an obvious increasing trend. The patent applications number of capital-technology intensive industry is much higher than the other three industries; the number of patent applications in resource-intensive industries has a slower growth. Then the dissertation empirically analyzes the effect of outsourcing on the innovation output. The conclusion shows that the material outsourcing has a significant positive effect on the innovation, but the effect of service outsourcing does not pass test.Industry scale and R&D expenditure will both affect the effect of international outsourcing on industry innovation ability, outsourcing will have a more obvious effect on larger scale industries and higher R&D investment industries.Finally, this dissertation discusses the influence of international outsourcing on productivity. Specifically, this dissertation measures total factor productivity and its decomposition indicators of industrial sectors in China through Malmquist index based on the method of DEA. Then the dissertation analyses the effects about material outsourcing and service outsourcing on the TFP and its decomposition indexes, as well as studying the influence of industry heterogeneity on the effect of outsourcing on the productivity. The results show that material outsourcing and service outsourcing both have positive effects on the productivity when controlling the variables of R&D investment and FDI, and the effect of service outsourcing on productivity is greater than that of material outsourcing. And also, industry characteristics will affect the effect of outsourcing on productivity. Relative to the low R&D investment and low proportion of foreign investment of an industry, outsourcing will have a greater effect on the productivity in high R&D input and high proportion of foreign investment industry.