Test The Effect Of The Local Market Distribution Of Industries In China

With the globalization accelerating, more and more trade takes place in market with similar factor endowments. It can't be that all trade patterns can be explained through the traditional trade theory, so whether there is another kind of explanation mechanism to explain these new trade model? If present, whether this new explanation mechanism can be used to explain those trade model?Our paper try to find such a mechanism with doubt, this paper firstly in theory explains that there exists another mechanism model, the Home Market Effect. And we find that the essential difference between Home market effect and traditional trade theory is that for home market effect industries tend to cluster in large market, the large market will become a net export area, but for the traditional trade theory industries tend to cluster in small market, the large market will become a net import area.Then according to the distinction of the two theory and basing on existing datas, we find and confirm that home market effect performs well under spatial distribution of industries in China by using the classic empirical model of Davis and Weinstein and the difference-in-difference model of Hanson and Xiang.At the same time, this paper finds that it is an excellent perspective and all new ideas to view the plight of coordinated development between regions and the problems of industrial restructuring. As to the coordinated development between regions in China, the existing researches take agglomeration as the main reason for the income gap, but home market effect takes the impartial treatment suffered by unskilled labors in coastal areas. After eliminating these barriers, agglomeration is compatible with the coordinated development of regional economies. So we suggest that premise of home market effect must be satisfied in the process of cross-regional integrated development. As to the industrial restructuring, since the comparative advantage of labor resources willn't last long, we should change our thought. We should consider it from home market effect to restruct industry, and we still need to consider the different performance of different industries. We should follow the inherent laws of industrial restructuring and give full play to the advantage of each industry.