Industrial Transformation And Trans-industry Transfer Of China's Manufacturing Firms: Mechanism,efficiency And Resource Reallocation

Industrial transformation and upgrading is a holistic restructuring along with the different stages of regional and national economic development.It is one of the key drivers of economic development currently in China and reflects the cumulative economic change from the industrial perspective.Economic structural imbalance and excess capacity are urgent problems facing China's current economy.As a result,the success of industrial transformation and upgrading has become an important prerequisite for China's economy to maintain a relatively high growth rate.Firms,as the micro carriers of national economic development,their trans-regional transfer and trans-industry transfer which drive the flow of resource elements are core ways to achieve resource reconfiguration,and such mechanism is the core strength of promoting industrial transformation and upgrading and industrial restructuring.Given this,this paper intends to study the microscopic mechanism of regional industrial transformation and upgrading as well as the productivity and resource reallocation efficiency improvements from the perspective of firms' trans-industry transfer.At the beginning,based on the monopolistic competition theory of heterogeneous firms,this paper constructs a model to study how productivity distribution effect works to determine the industrial structure.It shows that the higher the technological level of the industry,the higher the productivity threshold.The distribution effect of productivity will lead higher-efficiency firms into higher-tech industries.Moreover,when industries face the cost-technical shock,neighborhood trans-industry transfer would be an effective way for firms within those industries to release pressure and maximize profits.But if this trans-industry transfer is accompanied with switching cost,this process will inevitably lead to resource misallocation among industries.The empirical results based on Chinese manufacturing firm data show that,in consideration of the switching cost,neighborhood-transferring becomes a remarkable feature of the trans-industry transfer process.Empirical evidences demonstrate that firms are inclined to transfer to industries with lower wage and with more equal access to subsidies.And inside industries with large scale,firms tend to transfer to industries even with lager average scale.While inside industries with low degree of conglomeration,low average productivity and high proportion of foreign investments,firms are inclined to transfer to the lower direction.The transfer direction indicates firms' pursuit for a market with relatively fair competition environment.In fact,firm's trans-industry transfer process is also a course of resource reallocation,thus this paper studies the resource reconfiguration effect of such process.Empirical regressions are based on PSM-DID,and the results show that these transfers can not only improve the productivity of transferred firms themselves,but also improve the efficiency of resource allocation and average productivity of the industries which firms transferring into through “catfish effect”.Because of the cost restrictions and technology structure and the barriers of interregional transfer,the industry location of incumbents deviates from that of new-firms,which would lead to relative regional resource misallocation.Based on the Hotelling model,this paper construct a new modified model to study firms' industry location decision.This model shows that neither firms' trans-regional transfer nor trans-regional transfer can help to achieve the resource allocation of Pareto optimal if the transfer process is restrictive,thus may probably lead to relative resource misallocation.Combining with theoretical analysis,this paper explores the mechanism of firms' industry location by using the data of Chinese manufacturing firms.The empirical results show that,different from new-firms,incumbents are faced with more restrictions in their industry relocation.Specifically,incumbents can't enter into competitive industry freely and respond to the ownership structure of the industry flexibly.Moreover,original wage structure of incumbents will prevent them from promoting wage during the procedure of transformation.Based on the difference of industry location between incumbents and new-firms,this paper construct a relative resource misallocation index to investigate the influential mechanism of resource misallocation.The findings show that governmental intervention will intensify the industrial resource misallocation of regions while spatial agglomeration and openness to trade can reduce the resource misallocation effectively.In consideration of the pursuit of fair competition environment which is reflected by firms' trans-industry transfer process,the author finally proposed several policy recommendations.It is hoped that the process of regional industrial transformation and upgrading would be promoted by creating a fair and orderly market environment,lowering barriers of local protection,reducing the government's economic participation and promoting market internationalization.Deficiency and prospects of future study analysis is the final part of the paper.