Research On The Relationship Between Industrial Agglomeration And International Vertical Specialization

China is gradually integrated into the global economic system with the rapiddevelopment of foreign trade and foreign investment while spatial distribution ofdomestic industry changes constantly with the arising phenomenon of industrialagglomeration. The change in China miniatures the world’s change in the verticalinternational division of labor and distribution of industry in the context ofeconomic globalization. The impact of trade liberalization on the industrial spatialdistribution in a country has become a new research field of theory and practice. Sothe research on the relationship between the industrial spatial distribution andinternational vertical specialization is significant for China to make reasonablepolicies. At the same time, the existing literature researches respectively in these twofields but not the links between them.This dissertation uses the theoretical analysis, statistical description and evidenceanalysis to carry out on the topic. Firstly, based on the literature review and analysisof the influence factors and effects of international vertical specialization andindustrial agglomeration, the mutual mechanism of international verticalspecialization and industrial agglomeration is put forward theoretically under thetheory of comparative advantage, scale economy and transaction cost. Then, thedissertation statistically reviews the development of international verticalspecialization and industrial agglomeration. Finally, to verify the mutual influence,Vector Auto regression model model using panel data and time series of12Chineseindustries from1993-2011are built to make an empirical analysis. The empiricalresult of the panel var model verifies the mutual influence between industrialagglomeration and international vertical specialization, tech is a main factor ofinternational vertical specialization and the mutual influence mechanism. The result oftime series VAR model shows that the relationship between industrial agglomerationand international vertical specialization varies among different industries.