The Effect Of Producer Services On The TFP Of Manufacturing Industry

Since the reform and opening up, China has made eye-catching achievements on economic growing. Depending on factor-input can cast positive effects on economy growth in the short-term, so productivity growth is the unique reliable way to keep sustainable growth in the long run. Manufacturing is the dominant sector and the engine of Chinese economy, that’s the reason why it obviously, plays an important role in domestic economy growth. Yangtze River Delta region and Pearl River Delta region are the two of China’s most important production centers and manufacturing base, meanwhile producer services in these two areas have their own geographical advantages. Therefore, it is important to make a research on the effects of producer service to manufacture development. The development of producer services to local conditions is of great significance in promoting regional manufacturing and is useful to the policy-making of two regions.The theme takes advantage of the manufacturing panel data of16cities of Yangtze River Delta and9cities of the Pearl River Delta from2000to2008. Solow model and input-output analysis and the variety growth model are also used in the analysis. The structure of analytical part can be illustrated as follows:firstly, calculate the intermediary demand of manufacturing industry on producer services. Secondly, compare the difference between the two regions after estimating the TFP of25cities. Finally, regarding the whole producer service and services put into the up-stream, mid-stream and down-stream as arguments to take econometrics test. Three conclusions can get through the study:The first one is the producer service cast positive effect on the improvement of the manufacturing efficiency, however it is mainly reflects in the downstream of producer service, namely conservative producer service.Secondly, the upstream producer service of Yangtze River Delta which is focusing on R&D service has positive effect on the efficiency of manufacturing. It means the execution of policies mainly on R&D facet has worked out but financial and business service don’t turn out positive effect. The modern producer service of the Pearl River Delta doesn’t promote the manufacturing efficiency of this zone. The reasons can be illustrated as follows:on one way the institution input in this zone is not enough, so it is necessary to increase the number of talent and construct the solid human resource environment for scientific research enterprises by increasing the input of scientific research personnel and strengthening governmental support for agencies such as local colleges and universities. On the other way, the demand for producer service is not sufficient, so it is necessary to strengthen governmental support to enlarge manufacturing demand for producer service and raise the match degree of two sectors.Finally, although the weight of intermediate demand for manufacturing is increasing, the range of improving is limited. The increasement of intermediate demand of labor intensive enterprises is larger than others which indicating the variety of the producer service is expanded and the quality is improving.