Producer Services Inputs And Manufacturing Upgrades

Since the reform and opining-up, Chinese economy, especially manufacturing industry has developed with stunning speed. On the comparably basis, value-added of manufacturing industry in the designated size grows at annual average growth rate of approximately15%, so China has been known as the "World Factory". Although China has surpassed U.S. and becomes the biggest manufacturing country in the worldwide, productivity is far lower than that of U.S. The development of China’s manufacturing industry has been depending on the consumption of resources, energy and cheap labor. However, with the problems of resource depletion, environmental pollution and rising labor cost, the manufacturing sector is urged to making transformation and upgrading. According to the theory of extensive division of society, producer service is separated from manufacturing industry and provide intermediate product for it. The thesis focuses on exploring the role of producer service in the four kinds of upgrading of manufacturing industry.Firstly, the thesis starts with the analysis of the impact of producer service on the upgrading of manufacturing industry, which is the foundation of the following theoretical model. The input-output tables are used to analyze the relation between producer services and manufacturing upgrading. The main conclusions are that production service industry lags behind the manufacturing sector. China’s great efforts to develop the manufacturing sector put the crowding-out effect on the production of services. Secondly, panel data analysis methods are used to analyze the relation between producer services and manufacturing upgrading from three perspectives. The main conclusions are that producer services impetus to the upgrading of manufacturing sector, but the effort is not significant. Transportation, finance and insurance industry have a positive impact on the escalation of manufacturing industry. Scientific research industry and comprehensive tech-service show a positive impact on the escalation of manufacturing industry in the following year. Transportation, finance and insurance, real estate have positive effects in the escalation of three categories of manufacturing industry which are low technology, medium and low-skilled, high-tech. The transport industry contributes mostly, followed by real estate, while finance and insurance sector is the weakest. Secondly, four categories of upgrading in the manufacturing sector are illustrated, which are process upgrading, product upgrading, feature upgrading and chain upgrading. In this part, time series regression is also been used to analyze the relationship between producer service including its sub-sectors and the escalation of manufacturing industry. Producer service promotes each type of manufacturing upgrading. Specific to the internal structure of manufacturing, the influence of producer service only stays at the low-end manufacturing. Finally, through the establishment and improvement of the policy recommendations for the development of producer services, China should vigorously develop the producer service, thus devotes to upgrade the manufacturing industry. Meanwhile, an appropriate upgrading path of the manufacturing industry is needed to make the escalation of manufacturing industry come true.