The Research Of Transforming And Upgrading Traditional Industries Of Jilin Province

Traditional industry in Jilin Province has the absolute advantage of the wholeprovince’s industries, as it has the significant proportion of the total economic output.Transformation and upgrading of traditional industries in Jilin Province is the key torevive the economy and keep sustainable development. This paper, based on theanalysis of the strategic position of the traditional industries in Jilin Province and thedevelopment status affirmed, breaking the assumptions of neoclassical economics thatfull capital mobility defined conditions, reveals the root cause of the difficulty oftransformation and upgrading of traditional industries. On the perspective of sunk costs,property rights and information asymmetry, the paper comes to a conclusion that thetransformation and upgrading of traditional industries in the past were unsuccessfuloften by sunk costs constraints, property rights and incomplete information and otherfactors, then propose the suitable policy according the situation of traditional industryin Jilin Province. The transformation and upgrading of traditional in the transformationof the primary will not be practical and effective since the sunk costs, transaction costsand information asymmetry, and implementation of subsequent transformation will notbe accordance with envisaged idealized state in late-stage development. But towardsthe other way, resulting in the transformation of the industry upgrade difficulties, thatis the plight of the transformation and upgrading of traditional industries paradox.Therefore, in order to ensure the healthy and sustainable development of thetransformation and upgrading of traditional industries in our province, it is necessary toproceed from the root causes of the industrial upgrading paradox. That thetransformation and upgrading of traditional industries can not only rely on marketforces, but also need a combination of perfect market system and governmentintervention policy, working together to pass on sunk costs, reduce transaction costs,then propose the industrial structure adjustment and upgrading of strategic prioritiesand suggestions in order to create a fair and equitable business environment. This paper is divided into six parts. The first part is an introduction of the mainbackground research on the problem of the transformation and upgrading of traditionalindustries in Jilin Province, the significance of the topic elaborate, and then reviews theresearch status which lasts simple summary of the content of the writing of the full text.The second part discusses the traditional industry transformation and upgrading ofthe theory. Firstly, it defines the traditional industries, industrial restructuring,industrial upgrading, and other related concepts, then describes the existing theory ofindustrial transformation and upgrading of industrial structure. Finally, converting theresearch perspective, it puts forward the theory of upgrading traditional industries inthe non-mainstream economics.The third part describes the status of the traditional industries in Jilin Province,the automotive industry, petrochemical industry, food processing industry, then affirmsthe contribution of traditional industries to meet people, material needs, providesubstantial tax revenue, create jobs and so on. Finally it highlights the importantposition and the need to upgrade and transform the traditional industries in JilinProvince.The fourth sector is the focus of this article, which re-examines the reason why thetransformation and upgrading of traditional industries is so difficult from sunk costs,institutional constraints and transaction costs theory of non-mainstream economics. Onthe one hand, due to the presence of sunk costs and other factors,the transformationand upgrading of traditional industries are limited, on the other hand, also caused bythe presence of uncertainty，information asymmetry and the deviation determine ofentrepreneurs’ expectation, and finally leds to the successive development oftransformation and upgrading of traditional industries deviate from their originaltrajectory, resulting in the paradox of industrial upgrading. This is the root cause whichis difficult to upgrading and transformation of traditional industries.The fifth part is the part of policy recommendations. Firstly, according the rootcauses of the difficulty of transformation and upgrading of traditional industries, it putsforward the theory to overcome it, which means to improve market system andcombine the "visible hand" policy to make up for reducing the sunk cost, and after that combined with the status quo of Jilin Province traditional industry development, itpresents suitable policy recommendations to this traditional industry transformationand upgrading development.The sixth part is the pat of conclusion. This part is a summary of thetransformation and upgrading of traditional industries in Jilin Province, drawing theinadequacies and research directions in the future. The research of this paper comes tothree conclusions: First, it affirms an important position of the traditional industries inthe economic development of Jilin Province; Second, sunk costs, transaction costs anduncertainties are the root causes of difficulties for traditional industries transformationand upgrading, and also are the root causes of uncertainty of successive developmentcaused by the industrial upgrading paradox. The third is a combination of the reality ofJilin Province to make policy recommendations, the transformation and upgrading oftraditional industries needs government intervention and market combined with eachother to improve market competition mechanism, reduce transaction costs and pass onsunk costs. Enterprises are also needed to cooperate with the government to addressthe constraints of internal and external corporate incentives, investing in the protectionof human capital, financial resources, and to promote the transformation and upgradingof traditional industries.