Trade And Investment Integration And Differentiation, Manufacturers, International Strategy

As the communication and cooperation of countries in the word become more frequent and deepening, the cross-border flows of goods and factors become more and more frequent, and international trade and FDI are growing rapidly. The international division of labor is deepening, and is becoming the different processes, different factor intensity and different segments of the value-added within the product. the essence of the international division of labor have evolved Intra-products division,based on the factors. While the Multinational Corporations have been growing rapidly, and they have been a major engine of international division of labor, international trade and FDI. Multinational corporations with capital, technology and manager experence take advantage of global resources and factors by their international strategies, in order to maximize their global profit. Therefore more and more associated enterprises and organizations have been controlled by the system instead of the outside market, what have formed the phenomenon of the integration of international trade and FDI.The integration of international trade and FDI, on the macroeconomic level, is the geographical agglomeration and the temporal synchronization of international trade and FDI. While on the microeconomic level, the integration of international trade and FDI is that multinational corporations integrate international trade and FDI into their global strategies, and which make international trade and FDI become interdependent and symbiotic around their value chain of international production. In the context of integration of international trade and FDI, the motivation, pattern and gain allocation of participating international trade and FDI for a country have been different. The Paper together Firm Heterogeneous firms'strategies with China's micro-macro reality, create mathematical and empirical model and will give us some advices for participating the international division of labor, international trade and FDI. The main body and research results as follows.In the theory Literature part, we introduce foreign economists'research on integration of international tradeand FDI. In this part, we introduce integration strategies and outsourcing strategies according to the evolution of multinational corporation strategies——integration and disintegration——from the microeconomic view, and then summed up the Chinese economists'research, in the field. In integration strategies of heterogeneous firms part, this study will expand Grossman(2004)model, using 2 factors(labor and capital) and 2 inputs with different factor intensive instrad of single factor and single input, and put the traditional factor endowment theory into the model. And the Paper is based on the hypothesis of developing countries and study the international strategies of firms in developing countries The research results showed that the production efficiency, production scale have positive on the internationalization of heterogeneous firms'integration strageties. The location of intermediate products and location of final products have positive effect for each other. The targeting market capacity is positive for the location of final product, while the cost advantage is positive for intermediate product. Then we use our domestic firms'data to test our previous theoretical conclusion by establishing multi-ordered choice model and binary choice model.In outsourcing strategies versus integration strategies part, our mathematical model is based on Antras(2004), but changes the C-D production function into constant elasticity substitution production function(CES).By doing this, on the on hand ,we can introduce a new variable——technology dependence between intermediate producers and final goods producers which will play an important role in bargaining power, gain distribution between intermediate producers and final goods producers, and dicisions on international strategies of final goods producers. On the other hand, because CES function includes C-D function, Leontief function and the linear function, our model is more general. Our research showed that the productivity of heterogeneous firms, the technology dependence between interdiate producer and final goods producers, component-intensive of final product, the relative fixed production costs of integration strategies and factor endowments of countries integrated with the impact of differential advantage vendors on outsourcing or integration, and location decisions of heterogeneous firms,In interation of international trade and FDI and china's foreign trade and foreign Investment part, firstly we study the performance of integration of international trade and FDI, using China's macro-economic data. Secondly to analysis the reality and advantage of domestic enterprises participating the international division of labor, foreign trade and distribution of benefits, as well as the status of foreign investment in China. Finally we gave some advices for our foreign trade and foreign invertment. We consider that China should weight openness of foreign trade and policy support ,and encourage the scarce factors inflow in order to create the competitive advantage of our abundant factor. At the same time we should distinguish between different types of foreign-funded enterprises, and according to our economic growth and development, increasing employment, and upgrade our industrial structure we should attract investment, based on our demand.