China’s Service Industry Growth With The Transfer Of International Services New Perspective Of Baumol’s Cost Disease Model

Since1990s, the mainstream field of the international industrial transfer from manufacture industry turn to service industry, international services industry shift arose in the developed countries of the closeness between market needs, and as the communication technology and the developing countries market free degree rise, the services industry shift between developed and developing countries become a new trend. Services international industrial transfer of the four main means has:service foreign direct investment, service outsourcing, service and the offshore equity arrangements, such services transfer drives human resources, technology management and other senior elements of the flow, multinational companies in the perspective of global issued to the rational allocation of resources and global industrial structure change.China undertaken the transfer of global manufacturing, and begin undertake the International Service Transfer. The proportion of China’s service industry in the use of foreign investment is in a process of increasing. The proportion of China’s service industry in the national economy and the proportion of total employment population are in a rising trend.China’s service industry development in line with the economic trend in the global process of economic development of developed countries, but the reference to the historical development experience in the United States and other developed countries found to have suffered a sharp decline in productivity growth in the service sector rising process, resulting in a direct drag on the pace of economic growth. This phenomenon is defined by Baumol cost disease of the service industry. The reason of services cost disease is the service sector labor productivity lag and lack of price flexibility. Services cost disease may be a universal phenomenon inevitable in the process of continuous development of a country in the service economy and the national economy.Will the international services transfer result cost disease of China service industry? What impact of the international services transfer on China’s service industry and what impact? This paper attempts to explore these two major issues.In this paper, with the analysis of1995-2010China’s service industry data, the international industrial transfer from multinational companies led the dynamic transmission mechanism. By expanding the Baumol model, a particular emphasis on efficiency under the impact of China’s service industry grew in the international industrial transfer:China’s service industry labor productivity growth and lagging in the service sector share of employment and growth in service sector income elasticity and price elasticity of changes in the services sector accounted for the change of the ratio of the proportion of the national economy. Conclusions show that:1、 international service transfer will not result in the cost of China’s service industry disease.2、specific performance of international service transfer in the impact of China’s service industry:(1) China’s service industry labor productivity lag narrowed.(2) China’s service sector employment has risen.(3) the income elasticity and price elasticity of China’s service industry have a smaller trend.(4) the long term, the Chinese service sector share of GDP rise with income levels increase.