Internet,Offshoring And The Factor Bias Of Technological Progress:Theory And Empirical Evidence

The development and application of the Internet are changing our lives,as well as the mode of production and international trade.With the help of the Internet,enterprises can organize production in a wider space and make use of production factors more efficiently.The popularity of the Internet also promotes the explosive growth of offshoring activities,which reshapes the competition pattern of the factor market.As a result,the Internet and the offshoring inspired by the Internet may jointly affect the factor bias of a country's and even the global technological progress.The main purpose of this study is to analyze the influence of the Internet and offshoring on the direction of technological progress,witch focuses on two clues: one is the direct influence of the Internet on the factor bias of technological progress,the other is the indirect influence of the Internet on the factor bias of technological progress through offshoring.Firstly,this paper summarizes the literature related to the Internet,offshoring and technological progress bias,defines the related concepts,summarizes the measurement methods of each variable,and preliminarily discusses the possible influence mechanism among the three variables.Then,the standardized supply side system method is used to calculate the technological progress bias of China's provinces,cities and major countries in the world.According to the calculation results at the provincial and city level,the labor bias of China's technological progress increased while the capital bias weakened.The technological progress bias of 40 countries calculated based on WIOD database also experienced the same trend.As for offshoring,according to the latest calculation method proposed by Koopman et al(2014),this paper uses the data of world input-output database to decompose the export value added by source and final consumption place,so as to measure the trade share of each country related to offshoring more accurately.The calculation results show that,with the process of global economic integration,the volume of trade related to offshoring in most countries in the world has increased.This paper uses the Internet penetration rate to reflect the development of the Internet.During the sample period,the Internet penetration rate in all parts of the world(including China)has significantly increased,and the impact of the Internet has penetrated into all corners of economic development.The preliminary results of correlation analysis show that technological progress bias index is negatively correlated with offshoring and Internet penetration,while offshoring is positively correlated with Internet penetration.The main purpose of theoretical analysis is to sort out the internal logical relations among the above three variables.Firstly,information elements are introduced into the production function to explore the direct impact mechanism of Internet popularization on the technological progress bias base on a typical theoretical framework of biased technological progress(Acemoglu,2002).Then the assumption that all tasks should be completed in home country is relaxed,which allows enterprises to find more efficient production factors in the global markets so as to introduce offshoring into the theoretical framework of this paper and explore the indirect impact of the Internet on technological progress bias through offshoring.The research shows that: 1)with the popularity of the Internet,the proportion of labor using the Internet increases,the efficiency of labor intermediates increases while the price rises,and the profits of monopoly manufacturers who develop labor complementary technology increase,which promotes technology manufacturers to develop more technology that is complementary to labor,leading to the increase of labor bias of technological progress and the decrease of capital bias.2)Offshoring has two effects on technological progress bias: productivity effect and structural effect.Under the joint influence of these two effects,offshoring makes the labor bias of technological progress stronger and the capital bias weaker.3)The popularity of the Internet makes it more convenient for enterprises to participate in offshoring.The higher the popularity of the Internet,the more tasks are off-shored to foreign countries.4)After the integration of the Internet,offshoring and technological progress bias into the unified theoretical framework,we can see that the Internet can enhance the labor bias of technological progress and weaken the capital bias by promoting offshoring.Then,this paper introduces the data of China and the world's major countries,and empirically tests the direct impact of the Internet on technological progress bias and the indirect impact of the Internet on technological progress bias through offshoring.Specifically,the empirical test can be divided into three parts: 1)Based on the panel data of China at the provincial level and city level,the direct impact of the Internet on the technological progress bias is tested.The results show that the development of Internet does strengthen the labor bias of technological progress and weaken the capital bias.This is because Internet improves the productivity of labor,but decreases that of capital which makes the efficiency of labor grows relatively faster.2)Combined with the panel data of the world input-output database and the United Nations database,the influence of offshoring on the technological progress bias was tested.The results show that the development of offshoring makes the technological progress direct to labor more.The mechanism test shows that the development of offshoring significantly improves the relative productivity of labor force,so that the technological progress is more directed to labor force,which confirms the productivity effect of the theoretical model.At the same time,the development of offshoring significantly improves the proportion of non-agricultural industries which also makes the technological progress direct to labor force,confirming the structural effect of the theoretical model.3)As for the indirect influence mechanism of the Internet on technological progress bias through offshoring,this paper tests it based on cross-border panel data according to the intermediary effect test method.The results show that the direct effect is significant when intermediate variable hasn't be introduced.After introducing intermediary variables,the Internet has a significant role in promoting offshoring,and through this channel,the labor bias of technological progress is enhanced.The direct effect of the Internet on the technological progress bias is no longer significant,while the indirect effect is still significant,which shows that considering that enterprises can offshore tasks to overseas,the Internet only affects technological progress bias through offshoring.There are three main innovations in this paper: Firstly,since the birth of the Internet,its economic effect has been widely concerned,but the relevant research mainly focuses on the impact of the Internet on economic variables such as TFP and labor productivity,while ignoring the effect of the Internet on the technological progress biased.This paper discusses the direct and indirect influence mechanism of the Internet on technological progress bias through the theory and practice analysis,which makes up for the lack of this aspect.Secondly,technological progress bias is an important factor affecting the share of factor income,but the causes of the change of technological progress bias have not been fully discussed.This paper introduces the Internet and offshoring into a typical theoretical framework of biased technological progress,builds three theoretical models,analyzes the influence mechanism of these two factors on technological progress bias,and makes up for the lack of this aspect.Finally,this paper uses the data of China's provincial level,city level and the world's major countries to measure the degree of technological progress bias in different regions of China and the world's major countries,as well as to test the theoretical proposition,which makes up for the lack of practical evidence of the above proposition.Combined with the current situation of China's economy,the findings of this article have certain practical significance for deepening the strategy of "Internet plus",optimizing the structure of income of factors,and dealing with trade frictions.