From The Home Market To The New International Division Of Labor

The essence of urbanization is the constantly changing in the spatial form of production-oriented organization. Since the Industrial Revolution of 18th century, urbanization has swept through the world, and various dynamic mechanisms of urbanization have evolved in different countries. And then, the increasingly deepening of economic globalization, make the dynamic mechanisms more sophisticated both at global and regional level. Therefore, the studies on the countries including China, which has rapidly integrated into the New International Division of Labor(NIDL), should explore on the mechanism at the provincial level. Furthermore, China's 12th Five-year Planning pointed out definitely that, the Eeffective mechanism to expand domestic demand is to move forward urbanization actively. According to it, it is of great significance to study on the dynamic mechanism of urbanization in some developmed regions with regional characteristics, so as to realize the aim of expanding domestic demand and maintaining social stability. Zhejiang province, is a typical developed region, which has closely integrated the commodity production, specialized trading markets and exporting trade. With the agglomerating of these factors, a large number of specialized towns have sprug up. The dynamic mechanism of urbanization in Zhejiang driven many cities or towns grow up to be medium sized, large sized or regional hub ones. However, the present studies on the dynamic of China urbanization are still fragmented and uncorrelated, in lack of convincing theories to support it. Therefore, to explore the urbanization mechanism of Zhejiang province, from dynamic and polybasic perspective, is not only representative, but also innovative for the studies of regional urbanization in China. To this end, this dissertation based on the theory of Home Market Effect, which is the core thought of New Economic Geography, used the Porter's Diamonds to analyze the dynamic mechanism of urbanization for Zhejiang province, which is concluded as "from Home Market Effect to the New International Division of Labor" in the dissertation.The New International Trade Theory(NITT) or New Economic Geography Theory(NEGT) always regards the export trade of manufacturing industries and the NIDL as separated issues, and have little consideration on the relationship between them and their impacts on urbanization. Simultaneously, urban geography usually focuses on the spatial pattern for cities or regions, such as global cities, metropolitan areas, urban agglomerations and so on. However, there are few achievements get from the combination of urban geography with NITT or NEGT. In addition, there is no study combing them from perspective of specialized market. This dissertation aimed to bridge the two separated disciplines, and engaged in a new and meaningful exploration, so as to provide a new analytic horizon for relevent studies.On basis of theory of Home Market Effects(HMEs), which is the core of NITT or NEGT, the dissertation used both theoretical and empirical analysis. Firslty, some theoretical arguments was carried under locially preliminary assumption; secondly, a mass of industrial and spatial panel dataset was put into modellized analyses; thirdly, the urban dynamics for Zhejiang Province was analyzied by camparison of different layering for manufacturing industry(such as the whole industry, sub-industry and its corresponding export trade), and by that of different spatial scale(such as country, province and city); fourthly, urbanization progress were expound based on above study, with Zhejiang as a case. There are four core objectives under exploration: firstly, the existence of HMEs for Chinese manufacturing and its exporting trade, on both national and provincial level; secondly, the role of HMEs in urbanization progress; thirdly, the functions of NIDL for spatial organization of production in urban areas; fourthly, the dynamic mechanism of Zhejiang urbanization in which the specialized market is regarded as a key agent.As an important cornerstone of the New Economic Geography, the theory of HMEs is actually a hypothesis reflecting the real world. Therefore, its theoretical applicability in different countries still needs to be constantly tested. Based on the sorting and evaluating of manufacturing test of HMEs at home and abroad, drew on the foreign classical econometric models and collected domestic the newest data, the dissertation analyzed the existence of HMEs in the China's manufacturing industries and export trade, bothe on national and provincial level. This part of study is the fundamental basis for full text, and is also the key part to draw the assumption that HMEs can promote the progress of urbanization. Through quantitative analysis, the article found that: Firstly, on considering of factor endowments of labor and capital, China's manufacturing industry as a whole has been showing the existenc of HMEs; secondly, there exist prominent home market effects for manufacturing industries related with nondurable goods and materials in China but that of durable goods are not as significant as the former; thirdly,10 out of the 15 kinds of manufacturing industries considered in the study, including the manufacturing industry of Textile, Apparel and Leather products, Woods processing and Furniture manufacturing, Paper manufacturing, Printing, Stationery, Chemicals, Metal smelting, Rolling processing, General and special equipment, Transport equipment, Communication equipment, Computers and other electronic equipment, Instruments and Office equipment, proves the existence of HMEs; Fourthly, the result demonstrateed comparative advantage of factor endowments have gradually declined and the HMEs rapidly increased from 1997 to 2007 which provided an effective explanation for the decline of the comparative advantage of resource endowments and the increase in the export scale of China's manufacturing industries; fifthly, among the 30 provincial regions under study, the regional response for HMEs is primarily found in the eleven provinces including Hebei, Jiangsu, Zhejiang, Guangdong, Shanghai, Tianjin, Shandong, Hunan, Xinjiang, etc. The study demonstrated that the countries and regions with relatively large domestic market can not only meet with local demands, but also export goods effectively. As a result, such countries and regions may become the net exporting regions.Since the HMEs exists in China's manufacturing industries and exporting trade, it's necessary to analyze their impacts on urbanization progress. Up to now, there are no directly relevant academic achievements on it. The study used the theory of HMEs as an instrument to explain the dynamics of urbanization and drew the conclusions as follows:(I) HMEs is an important factor influencing the location of enterprises and their spatial organization in the city. It is the existence of HMEs in the industries which can arise the Increasing Returns to Scale(IRS) makes the regions effected by IRS more attractive than other ones and the enterprises tend to locate in the regions with magnified Home Market Effect. As a result of it, the spatial agglormeration may be a progress of accumulated cycling. (II)HMEs can advance the market deveopment of specialized goods, which can consolidates the forward and backward industrial linkages, and lead to increasing demand for trade on materials and. Semi-manufactured goods. Therefore, under the condition of stable IRS, the correspongding reduction of transaction costs becomes very important. Consequently, the spatial agglomeration for trading come into being after the industrial agglomeration resulted by the HMEs. That is called as specialized trading market. (â…¢) HMEs can accelerate the progress of urbanization. The aggregated force of HMEs can attract people, capital and technology pour into the urban centor. With the strengthening of agglomeration, the congestion costs will increase accordingly. The enterprises with higher unit value return will stay in the centor, the others will be forced to migrate outside the aggreged region or to the peripheral area of the city. The enterprises in the peripheral area still have close contact with core area of the city, which promotes the extension of urban spaces through diffusion and agglomeration. In addition, the enhancing of urban competitiveness and the upgrading of industrial structure resulting by agglomeration can also urge forward urbanization. Furthermore, the different industries in the city have different impacts on the process of urbanization and its scale.The industries or provinces in existence of HMEs will turn to international market in the circumstance of saturation of the domestic market. Exporting is also a procedure of participating in the NIDL, which can be explained as the integration into the global value chains. In the context of Zhejiang province, the specialized markets, with the local industrial clusters, are generally served as the marketing platforms for the industries in the whole province. They show the existence of HMEs, due to the process of expansion from local, provincial to national market. Based on the case study of Yiwu city, the specialized markets of Zhejiang province carry the characteristic of IRS. That is to say, the HMEs exist in the specialized market of Zhejiang province as a whole. The conclusions are as follows:firstly, the specialized markets of Zhejiang province have experienced the internationalization process from inward to outward; secondly, the specialized markets of Zhejiang province not only participated in the local spread and agglomeration of global value chains, but also integrated into the great jump of value chain on a global scale; thirdly, the specialized market of Zhejiang province has experienced the internationalization process of participate-in, bringing-in and going-global.On the premise of relevant theories of New International Trade and New Economic Geography and urban geography, the dissertation used the Porter's Diamond model, and built the model of dynamic mechanism of urbanization in Zhejiang province with specialized market as the agent, with industrial clusters as interaction power, with scale of market demand as orientation, with organizational integration and spatial expansion as strategies, with government policies as incentive power, and with new international division of labor as developing opportunities. The study revealed that the sequential process from the realization of HMEs for specialized market to the participation in the NIDL was the major dynamic mechanism of urbanization in Zhejiang province. This mechanism makes Zhejiang province's urbanization have gone the "county strategy" in characteristic of the interaction between rural industrialization and urbanization, and start to march toward the "international strategy" in the features of accelerated industrialization and improved service industry promoted by urbanization.