Research On The Operating Mechanism Of Intra-product International Specialization

The concept of Intra-product specialization was first introduced by Sven W. Ardnt at the end of 1990s. Actually researchers have adopted various appellations from different perspectives to explain and research this phenomenon, such as Multi-Stage Production, Slicing the Value Chain, International Product Fragmentation and so on. At the same time, as the establishment of global production network and the growth of intermediate goods trade, especially the multi-dimensional trend of international specialization system caused by rapid development of economic globalization and technology improvement in recent twenty years, intra-product specialization has exhibited spectacular development. Thus theories on intra-product trade and specialization became important components and hot topics of international trade and specialization researches. Based on current literatures this thesis analyzed the operating mechanism of intra-product international specialization system and China's status and emerging trend in this system. A correct understanding of intra-product specialization has crucial importance for upgrading industrial structure of China and thus has huge influence on the improvement of economic development mode of China.The thesis is structured in five parts. The first chapter begins with introducing the significance of the topic from the academic perspective and real world situation perspective. Then current literatures on both theoretical and empirical researches of relevant topics are reviewed. In the next part, the structure and contents of this thesis are briefly presented. The main findings and flaws of the thesis are also summarized in this part.Chapter Two reviews the development and evolvement of international specialization and its relevant economic theories of international specialization. Firstly, inter-industry international specialization and its relevant theories are analyzed, which can be dated back to Absolute Advantage theory of Adam Smith and Comparative Advantage theory of David Ricardo. On the basis of these theories, Factor Endowment Theory was developed by Heckscher and Olin. As further development of international specialization, intra-industry international specialization spurred exploration of new form of international specialization among the academic world. Represented by Paul Krugman, a number of economists absorbed reasonable factors of former theories and created a brand new analytical framework of inter-industry trade. As the deepening of globalization, intra-product specialization unfolded a whole new modality of international specialization. The literature review concentrates on the work of Krugman, Feenstra and Hummels and explores the theoretical relationships of the three. The second part of Chapter Two introduces several important concepts which will be used in the following contents, such as intermediate goods, final goods, TNCs, GPNs and so on. The third part covers theories on global value chain which belongs to the field of Management studies. It also discusses the relationship between intra-product international specialization and global value chain and points out that the two in essence are different perspectives of the same phenomenon.Chapter Three explores theoretically the operating mechanisms of intra-product international specialization which contains three undividable parts: micro driving forces, medium governance mechanisms and macro coordination trend. The first part starts by analyzing the micro driving forces of intra-product specialization which are producer-driven and buyer-driven respectively. The thesis exhibits and compares the characteristics of definitions and inner mechanisms of the two types. The second part then discusses the governance mechanisms of intra-product international specialization and divides them into five classifications according to the standardization and complication of the transactions, which are namely Market mode, Modular Value Chain mode, Relational Value Chain mode, Captive Value Chain mode and Hierarchy mode. These five governance types are inner connected and twisted together in real world and may even transfer to each other under certain conditions. Such a finding provides theoretical support for upgrading industrial structure of developing countries. The last part of this chapter summarizes the macro coordination trend of intra-product international specialization brought by different levels of marketization in different countries. As the further development of international trade and economic globalization, a macro coordination mechanisms covering powers more than one single nation can be expected in the future.In the fourth chapter, the thesis explores the influences of intra-product specialization on the upgrade of China's industry structure by analyzing China's current status in the network of international specialization and the general innovation traces of global value chains. Firstly, relevant data and literatures show that China has gone through huge improvement in the network of international specialization and is now ranking the third among the trading nations in the world, which has been proved by both the amount and the structure of the export goods. However, China is still at a relatively inferior position in global specialization networks. For one thing, from the perspective of vertical specialization, China participates in intra-product international specialization mainly in the form of the processing and assembly of intermediate goods. On the other hand, China participates in intra-product international specialization mainly by taking low-value added production activities. Secondly, combined with former parts, this chapter analyzes the impacts of intra-product international specialization on upgrading China's industrial structure from the aspects of foreign direct investments influences, effect of strategic segments, diffusion effect of demand and industrial clustering effect. A clear understanding of these impacts has positive implications for China's industrial structure upgrade and status improvement in international specialization networks.Chapter five is the conclusion part of the thesis. According to the above elaborations and discussions, conclusions are reached and main findings are summarized. Combining the real world situation of China, recommendations are brought about benefit the future development of intra-product specialization and the upgrade of China's industrial structures. Firstly, strengthen the awareness of openness from the perspective of globalization. Secondly, theoretical focus should be transformed from comparative advantages to competition advantages. Thirdly, economic growth mode should be transformed from extensive modes to intensive modes so that industrial upgrading can be promoted. Fourthly, promote technology improvement by strengthening independent innovations. Lastly, breed home brand and marketing canals so that high value added fragmentations of value chain can be acquired by China, which could be crucial in improving market share and profits.