The Research Of The Vertical Disintegration And Reconstruction Of Multinational Value Activities

This article studies the recombination of the multinational companies'global production and trade networks. As the intra-products international industrial specialization, the separability of production processes has promoted product value chain dispersed. The value activities can be taking by the frims themselves, as well as purchased through market (outsourcing). The modern enterprises have a greater choice,"make or by". Besides, transport and communication costs fell, intermediate goods market become more convenient, all make the transaction costs decline, but also promote the growth of outsourcing. As a result, MNCs no longer rely solely on the establishment of offshore branches by vertical integration model in the global business, but trend to transfer the value activities to foreign firms, as cooperation with external companies. This article describes this new phenomenon as the vertical disintegration and restructuring of the MNCs'value chains.MNCs are considered as the driving force of economic globalization. However, despite the huge scale, there is no MNC can take all the global production and trade activities independently. The question is how do MNCs to leveraging global production&trade for profits? The main viewpoint is that MNCs by taking control the key stages of their product&service to leverage the global production and trade networks, and to a large extent determines what, where and how to produce by who.There already have tools for the analysis of the above problems, the global value chain (GVC) approach. GVC tracks the whole processes of the final customer value, analnysis the enterprise roles, relationships and governance issues in the value chain. Entire commodity value chain includes a number of enterprises, links as a network. As the firms'position in the value chain are differents, resource and power allocation also asymmetric. Thus, enterpirses in a value chain evolve into to leader and folloer. By hold the key link in the value chain, MNCs is a global leader in the product value chain generally, their income is also higher than the local supplier.Basic on enterprise network view, this article analysises MNCs in international production networks and industry. This study includes the following sections:Chapter1is an introduction, raise research questions, introduces the research methods and contest, and the implications of the study. The second chapter introduced the concept of value chain, and describe the MNCs in the global value chains. Then define the vertical disintegration of the multinational value chain while explain their motives. Chapter3use transaction cost theory and comparative study of economic organization to discuss the organization and coordination of transnational corporations on the global value chain, and explain the reason. The fourth chapter is the empirical research, take China as example, analysis the role of multinational value chain decomposition in the developing countries'industries disintergration. MNCs in China have had promoted China's outsourcing, and outsourcing rate is proved positive to industry output and employment. The fifth chapter turned to the analysis of policy implications. The decomposition of the multinational value chain has led to the reconstruction of the global industry, and also provides new opportunities for industrial upgrading in developing countries. Developing countries'policies purpose on attracting FDI in the past needs to be adjusted, to adapt to encourage outsourcing and local industries embedded in global value chain for development.