Theoretical Model Of International Labor Division And Industrial Structural Changes Under General Equilibrium

Since Reformation and Opening, China’s industrial structure used to changedsignificantly. The proportions of three industries had improved, from “second-first-third”before Reformation and Opening, to “second-third-first”. After the output of thirdindustry surpassed that of the first, the structure of “second-third-first” has beenretaining for as long as27years. Even beneath the impacts of international financial crisisin2007, China still keep her fast economic developing speed, but her structure turnsslowly and slowly, especially for the service industry.The influence of the international labor division on Chinese economic developmenthas been a classic example in international trade teaching materials, and this influence hasbecoming more and more evident. But how is the influence of international labor divisionon Chinese industrial structure, especially for third industry? This topic has been rarelystudied. The author regards that, since industrial structure is the result of factorsdisposition, and international division can virtually affect the efficiency of factorsdisposition, it’s obviously true for China that international labor division can affect herindustrial structure. So, it’s meaningful to study labor division’s impacts on the Chineseindustrial structure.To study this issue better, the paper analyzes the true industrial structure of China,following the thoughts of Bamohl’s Cost Disease, then build a theoretical model as theanalyzation framework and core. The paper references the basic thoughts of predecessors’theoretical models, such as H-O model, Cobb-Douglas model, and sets up a model of theimpacts of international labor division on industrial structural changes under generalequilibrium. The theoretical model turns to device the factors of a countries’ industrialstructural changes into labor factor, capital factor, consumption factor and internationallabor division factor. If a country is locked on the “making” side of the“making-servicing” division, its industrial structure will been putting off, even for ever.Lastly, this paper chooses corresponding proxy variables and finishes the initialdemonstration, which shows that besides the Baumohl’s Cost Disease, international labordivision is truly the factor of retaining Chinese industrial structure from being postindustrial.