Theoretical And Empirical Studies On The Effect Of Vertical Specialization To China's Industrial Technological Progress

Technological advances and technological innovation is fundamental to sustainable economic development and enhance the competitiveness. Therefore, the research on technological progress has been a hot topic in academia. There have been a lot of studies on the channel of Technical progress, and FDI and international trade and independent research and development are the main reasons for technological advances. Along with the diversification of forms of international cooperation, upgrade their skills through strengthening ties with other economies is becoming more and more import. Vertical specialization is such a new division and trade patterns which lay great impact to china's progress. The so-called vertical specialization is a trade pattern in which a country imports intermediate products or services from other countries as intermediate inputs used into domestic processing, and then exports final products. During past 20 years, vertical specialization has rapidly developed and attracted much attention.By using Econometric Model, we measure the overall impact, between 1992 and 2003, of vertical specialization on the three major industries'technology progress, and also more carefully measure its impact on the sectors of industry. The results show that the vertical specialization has much greater impact on industrial sectors than that on the three major industries. Meanwhile , compare with international trade and R & D investment, vertical specialization plays significantly more important role in promoting technology. Analyzing different industrial sectors, find that vertical specialization impacts technological progress is not in the same degree. This results from industrial characters, such as relationships with other industries, industry technical standards and the openness. This paper also studies the key factors which affect the degree of vertical specialization, so that we can take appropriate trade policy and industrial policy to make better use of vertical specialization to improve technical level and promote sustained economic and faster development.