The Impact Of Undertaking International Outsourcing On The Productivity Of The Industrial Sector

Since the mid-1990s, international division of labor is further refined with the development of production and information technology, International division gradually shift from inter-industry division of labor and division of labor within the industry to intra-product specialization, Production can be separated in space. In this case, As the product of International division-International outsourcing emerged and continued to grow. Many enterprises entrusted some non-core, non-dominant businesses which traditionally carried out by the internal to independent foreign companies in the form of international outsourcing.In this process, With low-cost manufacturing advantages, China comprehensively participated in international outsourcing, which has enormous impact on employment, wages, enterprises’ technical progress and industrial productivity in China. However, the effect of the impact is still uncertain. Moreover, China has been increasingly challenged by other countries or regions which developed at a similar stage with the same comparative advantages (such as Mexico, India, Vietnam and other Southeast Asian countries). In this economic context, it is of great significance to analyze the economic effects of China’s participation in international outsourcing and examine the productivity effects of China’s participation in international outsourcing, It’s better for China to recognize the situation of undertaking international outsourcing and have a clear idea of the way the international outsourcing acting on industrial productivity and the extent. It’s also of great significance to formulate economic development policy for China.Information technology and trade liberalization promote the rapid development of international outsourcing, productivity effect of international outsourcing has become an important research direction.Based on the review of domestic and foreign scholar’s papers on international outsourcing. With the combining of theoretical analysis and empirical analysis, examining the impact mechanism and economic effects of undertaking international outsourcing on China’s industrial productivity. Based on the previous studies, This article uses Feenstra and Hanson’s vertical specialization index to indicate the extent of international outsourcing. Using the panel data of China’s fourteen industries from1995to2010to investigate the productivity effects of undertaking international outsourcing on China’s industries, Then examining the productivity effects of undertaking international outsourcing on different types industry which classified by factor intensity. The empirical results show that the manufacturing sector to undertake international outsourcing of capital (technology)-intensive industries, the impact of coefficient is5.544823, while for labor-intensive industries, the impact of coefficient is7.993380. On the whole, undertaking international outsourcing had a positive impact on the enhance of industrial productivity, but have different impacts on the capital (technology)-intensive industries and labor-intensive industries.Among them, The impact on labor-intensive industries is higher than the impact on capital(technology)-intensive industries.