International Business Cycle Synchronization And Technology Innovation

Business cycle is also recognized as business circle or economic fluctuation, which is showed as the index of gross social output, CPI or employment status changes up and down periodically. It means the economic development process with regular fluctuation in recent years. The incentive of studying economic derives from the interesting of economic crisis, for economic crisis actually is regarded as a period of a business circle. With the trend of economic globalization, the united commodities and labor markets are emerging. The synchronization between business cycles in different areas is regarded to be intensifying. The economic condition is conducted from one place to another by commercial or financial channels.After the Second World War, several capitalism countries established the new world system, under the United States’proposal. The economic part of the new world system is mainly composed by world economic organization, such as WTO (World Trade Organization), WB (World Bank) and IMF (International Monetary Fund), and multilateral economic agreement. Thanks to this tremendous economic circumstance improvement, the capital and commodity flows are increasing swiftly, the international labor division and cooperation has been molding. For years, many economists indulged themselves into business-circle transmit study, they put their effort to reveal the significant and dominate factors which correlate the intensity of business cycle synchronization. And the results were favorable, for most of the statistics showed that if we strengthen the economic relationship between different countries, their business cycle synchronization will become intensified. This discovery supports the economic community strategy and free trade theory. Considering from this theory, if one country falls into a recession occasionally, other countries have enough theory reasons and incentives to hold fiscal and financial policy collaboration attitude. The whole world economy felt cold, when subprime crisis emerged in the United State, which seems to show the real phenomenon of the business synchronization theory discovered. However, when we find that the Germany economy went strong when the PIGS countries struggled in the debt crisis, we may felt a slight suspicion on this theory.In this thesis, combining references in the history, we defined the notion of business cycle synchronization firstly and describe latest academic findings. On this basis, the paper describes the mutual conduction due to the economic linkages between the economic integration. For the development of the production technology is a kind of destructive development, in the context of the industrial gap caused by the technology gap, the economic development is quite different from economic growth, which will lead to construction and destruction in north and south poles respectively, and arouse economic un-synchronization. Although it was mainly admitted that the intensifier the economic relationship is, the stronger the business synchronization will be, actually the truth is not as doubtless as that in our mind from some aspect. The statistics reveals that the low frequency business cycle synchronization becomes weaker when the economic globalization is striding forward.In this thesis, we deem that technology innovation is actually the main factor of long term business cycle synchronization. Sometimes the groundbreaking development in basic research will attribute to technology innovation cluster in time dimension, lead to the new industrial department emerging, and bring about new consumption. The international structure of labor division may change when the technology gap changes. And this international division of labor change may become more intensified when we wipe out the capital barrier between nations and reduce the cost of capital flow worldwide.This thesis has five chapters. In the first chapter, we list the background, value, meaning of business synchronization study and find its study prospect from the former study weakness. In the second chapter, we manage to deduct how the innovation factors will influence the business cycle and interpret the gap between different business cycle. The third chapter gives us the methods to decompose the business circle and to observe this discrete time series from another aspect. The fourth chapter is about empirical analysis which is support the former theory deduction. And the final chapter gives us conclusions of this thesis.