The Empirical Study Of Vertical Specialization On Manufacturing Industry Productivity Of China

Vertical specialization (VS) was put forward at the earliest by Balasssa of American economist in 1967. He deemed that the procedure of goods production can be dismembered lots of different parts to produce. The processes and links of the product are conducted in different countries and add up the quantity of intermediate products trade. It forms a vertical international trade chain to benefit the participating countries. Vertical specialization developed rapidly during the 1990s and it causes lots of scholars'attention. Later, some scholars put forward the similar concepts, including Intra-production Specialization,Outsouring,Disintergration of production,Fragmented production and Global production sharing.With the development of economic globalization and science technology, the division form of VS is more segmentation and presents complex and multilevel development patterns to make more and more countries to take part in it in the world. Throng technology transfer and spillover VS produces an important influence to the world. So it is essential to research the economic effects of VS. Next I will take China ( the developing country) for example to research the effect of VS on productivity of Chinese manufacturing industry, it is upon the reader to have a true judgment of the position of developing countries in VS.Firstly, we take an overview on the background and significance of VS, and focus on the effects of VS on the world. Later we introduced large number of literatures to reveal the concepts and economic effect of VS. It gives the thesis a rich theoretical support. Then we fixed three productivitivies including labor productivity,total factor productivity(TFP) and capital productivity to reflects the effects of VS on the world from different sides respectively. At last through empirical tests it discusses the effect and mechanism of vertical specialization on productivity of Chinese manufacturing industry. This thesis demonstrates that the effect is active of VS on the productivity of Chinese manufacturing industry. When it deeps into technology and capital, it goes against to the innovation capability of local industry and it may lose the capability of sustainable development. The developed countries will continuously innovate technology,quality and safety and so on to enter into the trade barriers standard to make the developing countries continuously to import foreign advanced equipment and obsolete own equipment. It will limit the technology innovation development space of developing countries. So when we actively participated in the VS, we should strengthen our production capacity,actively improve our technology absorptive capacity and then transform the foreign technology to our own independent innovation capacity not relying on foreign technology to survive.