Studies On The Impacts Of Vertical Specialization On China’s Industrial Productivity

With the development of economic globalization, international trade has experienced from inter-industry to today’s intra-product trade. And international specialization also changed from inter-product specialization to intra-product specialization which is called as Vertical specialization (VS). VS provides a new vision to study world economic development and economic cooperation since it is more detailed. China, as the largest country in world trade, analyzing the economic effects of VS is particularly important.VS developed rapidly in 1990s and caused a lot of attentions in academe. The differences between VS and the other specializations are that it expands to the center of production processes, and looks for the best location, for different process on basis of comparative advantage of the process. Different products have different optimal size and the best investment, and so do processes. VS makes sure that every stage of production can product in a more efficient allocation of resources and a more precise scale production, in this way it will improve the general welfare of the world economy.In this paper, we use empirical test to analyze the impact of vertical specialization on productivity in 20 sectors, and we consider differences between different industries to study the influence specifically. The results show that, VS can improve the overall productivity levels, and this increase is mostly done by technological advances. And the role of VS in promoting productivity is a little bit more important than R & D investment. And for different sectors, VS plays a more important role in capital intensive, export oriented and fragmented sector. So when we participated in VS, we have to give different guidance to different sector. And the manufactures also have to develop their own technology to get more chance in international specializations.