Study On Outsourcing’s Effects On Productivity In Zhejiang

With the development of International division and industrial modularization, asignificant feature of economic globalization is that outsourcing is rising rapidly andbecoming the new point of trade, especially offshore-outsourcing. Outsourcing is akind of intra-product division which transfers the non-core business to the externalenterprise for production. Feenstra (1996) put forward the measure of outsourcingrate index to measure the value of the import of intermediate products contained inall intermediate inputs of final product. Since the accession to the WTO, China alsoblends actively into the international division system. China carries on raw materialsand other intermediate inputs from developed countries; Besides, China transferssome lack of technology production to foreign manufacturers, by using outsourcingto participate in the global allocation of resources, and that promotes thedevelopment of China’s trade. Zhejiang Province belongs to coastal region which hashigh degree of export-oriented and its import and export trade is strong. So wechoose outsourcing of Zhejiang as our research object. What is the degree ofinternational outsourcing of Zhejiang province? How do we analyze and empiricallytest the economic effects of outsourcing. What is the difference between serviceoutsourcing and manufacturing outsourcing that can effect on productivity? Studyingall those questions can help us to deepen the understanding and awareness ofinternational outsourcing and put forward policy suggestions to promote the industrylabor productivity. So we can propose empirical basis for the transformation andupgrading the manufacturing industry and the international division of labor.This paper will do a deep research on Zhejiang’s outsourcing and its influenceon productivity from industrial data. Firstly, considering existing research, we usenew economic theory to explain the causes of international outsourcing, andcombined with the characteristics of outsourcing, this paper also wants to build theframework of theoretical analytical and hypothesis of the affection of outsourcing onproductivity. Then use measuring indicators to describe the status of outsourcing ofZhejiang, to observe the changes in tendency. Besides, this paper is to do empiricaltest by econometric model method with panel data. The results are as follow:(1) Outsourcing and manufacturing outsourcing in overall level go ahead of serviceoutsourcing, outsourcing manufacturing is the main form of Zhejiang’smanufacturing industry. Although service outsourcing is at a relatively low level,with the development of service economy and the increasing expansion of trade inservices, outsourcing services will have a lot of room to grow.(2) The outsourcinglevel of capital-intensive industries is higher than that of labor-intensive industries;the outsourcing level of high-intensity export industry also is higher than that oflow-intensity export industry.(3) The outsourcing of manufacturing has a significantrole in promoting labor productivity. From the different nature of the intermediates,both service outsourcing and manufacturing outsourcing have obvious positive effectin manufacturing labor productivity, but service outsourcing presents moreeffectively.(4) From the interaction factor, we can see the interaction of the factorsbetween outsourcing and FDI play a significant role in labor productivity, and thatmeans outsourcing can have indirect effects on Labor productivity by FDI.(5)Industry differences have a significant impact in productivity, outsourcing ofresource-intensive industry boost more obviously than labor-intensive industries inproductivity, and low-intensity export industry presents more obviously thanhigh-intensity export industry.