The New International Division Of Labor Perspective Of Service Industry And Service Trade Association Study

It has been pointed out by classic international trade theory that service industry is foundationto a skyscraper as is to service trade while service trade can not develop without the support ofservice industry. The above statement established the solid co-relationship between serive tade andservice industry. Future more, it becomes a common belief held by many scholars that policiespromoting the increase of service industry will inevitably spped up the development of servicetrade. However, it is to our abservation that while the annual increase of global service tradeamounted to9.9%from the year of2000to2009, the annual increase of global service industryonly comes2.7%. Moreover, major economies like United States, Australia and Korea, allexperienced the tramendace change from enjoying a more speedy increase in service industry toservice trade. Therefore the thoeratical breakthrough we expect to achive lies in the factorsexalerating the comparative growth of service trade and the mechanism behind it. The possibleoutcomes embracing ahead will not only be a supplementation to service trade theory, but also aapplication of the thorey of endogence growth in trade issues.Under the circumstance of upgrading trade friction and the turbulence of global fincialsystem casued by ongoing world economic imbalance, beneficial economic circle and interestbalance are foundations of the new global economic growth in the era of post global economiccrisis. In the view of structure, the key of the rebalance of Chinese economy lies in serviceeconomy, especially the increasing shere of morden service sector. In the view of the effectivenessof policy, the key of global economic rebalance lies in the transmission mechanism of serviceindustry and serive trade. The character of new international division of labor in service is featuredby the deeper fragmentation of service product and the globalization of service chain. It hasbecome a critical issue that service trade and service industry are coordinated in order to maintaina more effective policy system.The dissertation is developed into four main parts:The first part is consisting of introduction and chapter one which provide the insight ofresearch significance and research design. The concerning definition and the review of theories arealso presented in this part.As the most important part, part two includes chapter two to chapter six. First and foremost,chapter two identified the factors affecting the correlations of service trade and service industry byanalyzing macro datas of the main economise in the world. We discovered that three mutrullyinfluencing factors that plaied the most important roles are innovation, FDI and institutionalreform. All three factors together promote the comparative increase of service trade to serviceindustry.The mechanism and the extent of impact of innovation, FDI and institutional reform arediscussed from chapter three to chapter five. Chapter three, from theoretical and empirical view,discovered the dynamic mechanism of FDI affecting the correlation of service trade and serviceindustry by constructing the dynamic service trade model and employing industrial level data. Thestudy revealed:(1) service export is positively correlated with the growth of service section on aequilibrium growth path;(2) the effect of market liberalization on the correlation of service exportand growth could be negative or positive, depending on the comparison of FDI spillover andextend of internationalization;(3) The market structure change caused by FDI will draw the growth of service section away from previous equilibrium growth path.Through the extension of Grossman-Rossi-Hansberg model and also applying the industriallevel data, chapter four focused on the mechanism of technical innovation on the correlation ofservice trade and service industry. This chapter discovered:(1) statically, technical innovationpromot service outsourcing, the development of different form of outsourcing depends on thecomparative advancement of different service segmentation technology.(2) dynamically, theextent of impact of technical innovation on the correlation of service trade and service industrydepends on market openness, the development of service economy and the technical concentrationof service industry.(3) the channel of communication technology and R&D investment promotingservice trade is through the increase of TFP.By extending Monetary Integration Model, chapter five discovered the dynamic effect ofmonetary integration on service industry and service trade on the balanced growth path of serviceindustry. The study found out:(1) common currency will promote service trade through bringingdown the invisible trade cost;(2) monetary integration is negatively correlated with the connectionof service industry and service trade;(3) these two effects are particularly stronger for lessdeveloped countries with service industry and less open countries.Chapter six returned to the reality of China from where we discovered the differentcorrelations of service trade and service industry based industrial level data. This chapter alsorevealed the two way effect of service trade and service industry from the perspective of growthand structure change.Chapter seven alone stands for part three which provide a welfare analysis. The developmentmode of service industry varies according to different correlations of service trade and serviceindustry. This part is aimed to find out the defferent impact of domestic oriented mode andinternational oriented mode on national walfare, in this case the comparative wage level. Citingthe software industry of China and India as an example, the study discoved: as a typicalinternational oriented industry, the software industry of India enjoys a higher comparative wageincrease from service outsourcing for a short term, while, as the typical dometic oriented industry,Chiese software industry takes a long term advantage.Part four includes the last chapter which is designed to offer the advice on construction ofpolicy system. Recommendations to promt the balanced development of service trade and serviceindustry are proposed both on gereral and specific industry’s perspectives. Furthermore, thechapter also made the suggestion on how to accelerate the reginal economic cooperation andfinancial colabration from the perspective of service industry and service trade.The possible innovations of this paper are:(1) This paper analyzed both FDI and technical spillover under the same framework. Neithernew new trade theory, nor new growth theory applied a unified framework to study the impact ofFDI and technical innovation on correlation of service trade and service industry. This paperdeveloped a structural trade model in which FDI and innovation spillover are combined on thesame balance growth path.(2) This paper extent the Grossman-Rossi-Hansberg to better fit in the analysis of serive trade.Lacking consideration of the special features of service trade, new new trade theory failed tointroduce a service segmentation cost into the model which is the breakthrough of this paper. Bydedigning such a segmentation cost this paper better depicted the globalization of serviceproduction. (3) The combination of dynamic and static analysis is presented as far as method isconcerned. Based on the clssic endogence growth model, this paper embedded an outsourcingmodel into a open economic model. Therefore the impact of FDI and technical innovation wasanalysed on a balanced growth path.