Study On The Relationship Between Regional Factor Mobility And Extent Of Regional Division Of Labour For China Manufacturing Sector

Heckscher-Ohlin model and its development do not take into account demand and revenue effects on regional manufacturing division of labour and the New Economic Geography model also does not take into account the impact of the rural surplus labour flow. In China existing researches, the different stages of regional factors mobile were neglected. Based on these major defects, a framework to analysis the relationship between Chinese regional factors flow and regional manufacturing division has been established.In this paper, regional factors flow is divided into three stages and two balance points, that is, capital transfers priority in the labor flow stage, the capital transfers arising from the labor flow stage, transfer of rural surplus labor between urban and rural areas force capital transfers stage. And one balanced point is depletion of rural surplus labour. The two balance point is that two regional factors income equal. Based on this analysis framework, manufacturing sector division and intra-industrial division are discussed.When study on the relationship between mobile factors and regional manufacturing sector division, based on the demand rather than the cost of supply perspective in Heckscher-Ohlin model, combining Heckscher-Ohlin analysis framework with the income and expenditure functions, through regional factors flow, the substitution and income effects when industrial products price changes on excess demand and excess supply, factors price and so on, This paper analyses the relationship between regional factors flow and manufacturing division of developed regions and underdeveloped regions within one country.In this paper, that other factor in the same circumstances, if mobile factor into the use of mobile factor-intensive products sector, then factor mobility and industrial division is mutually complementary; If mobile factor into the non-mobile factor-intensive products sector, factor mobile and industrial division is mutually alternative. The traditional factor mobile theory considered that industrial division and regional factor mobile is mutual substitution. Modern factor mobile theory considered that if mobile factor into the export trade sector, regional factor flow and regional industrial division is complement for each other; if mobile factor into the import substitution sector, industrial division and factor flow is alternative for each other.When study on the relationship between mobile factors and regional manufacturing intra-industries division, through the product categories, price and the number of mobile factors, transportation costs, intermediate goods, and other variables, This paper analyzes the relationship between regional factors flow and regional manufacturing intra-industries division of developed and undeveloped regions at rural surplus factor stage. This article is different from the New Economic Geography model conclusions, at this stage; the flow of rural surplus factor can be effective in promoting the devision level of the manufacturing sector and intra-industrial within the two areas and between regions. Undeveloped regions do not need to rely on the proliferation effect of core area, because of their rural surplus labour. There will be dual-core balanced solution.Using the above model and framework, the paper focuses on the relationship of labor, capital flows and manufacturing division between China eastern and western regions from 1988 to 2006. In general, regional factors flow and regional manufacturing division is mutual complementarity, but different factors at different stages the weights will vary. In some stage performance is as an alternative and lag effect. For example, on the relationship of the manufacturing sector division within the two regions, labor flows in 1988-1997 and capital flows in 1998-2006 are alternative, and labour mobility within the two major areas, for manufacturing intra-industrial division in 1988-1997, has a two-year time lag effect.This article holds that at this stage, in addition to use industrial policies to promote regional manufacturing division, but also should be based on the factor mobility and on the income policy, the balance of competition, promoting income effect, shorten the time lag effect, breaking the monopoly of skilled labor market, rational planning unskilled labour mobility and speeding up the local capital flows, preventing the negative impact of foreign capital flows, promoting industrial transfer through gradient, and so on. These should be important measures to promote regional manufacturing division level of China.