The Influence Mechanism And Empirical Research Of International Fragmentation Of Production On China’s Manufacturing Industries’ Position In Global Value Chains

With the rapid expansion of manufacturing production networks around the world, the phenomenon of international intra-product specialization appeared. Under the auspices of multinational companies, developing countries were in the low-end segment of the value chain at the beginning. But in the later, the four Asian tigers seized the opportunity to successfully transition, while some developing countries in South Asia were still fixed at the low-end segment of the value chain. In the new period, international and domestic situation changed, China’s economy entered a critical period of transition. China urgently needs to identify and improve its position in global value chains.Based on the data of 13 manufacturing industries between 1998 and 2009, this paper measured the extent and position of international intra-product specialization of China’s manufacturing industries. On the basis of theoretical analysis, this paper built a panel data model to analyze the effect of international fragmentation of production on China’s manufacturing industries’ position in global value chains. Finally, the paper summarized and made policy recommendations. The main innovation points were as follows: First, this paper measured the extent and position of international intra-product specialization from the perspective of value-added in order to make up the shortcoming of macro data that cannot observe production process flow. Second, in the empirical analysis, this paper not only analyzed the combined effect of international fragmentation of production on position in global value chains, but also further divided the combined effect into direct effect and indirect effect, and introduced the cross-term to explore its transmission mechanism. The conclusions were as follows:The extent of international intra-product specialization of China’s manufacturing industry grew and then declined, and China’s position in global value chains showed a growing trend. Overall, the combined effect of international fragmentation of production on China’s manufacturing industries’ position in global value chains was significantly positive. The direct effect was significantly negative and the indirect effect was significantly positive, which achieved mainly through technology absorption effect caused by human capital, resources allocation effect caused by institutional innovation and the technological innovation effect, only the effect of technology-intensive industries was significantly positive and showed the same transmission mechanism as the whole. Therefore, this paper argued that international fragmentation of production can significantly improve the position of China’s manufacturing industry in global value chains by relying on the support of the basic resources and conditions. Thus, this paper suggested that China should encourage independent innovation, strengthen the institutional innovation and pay attention to the accumulation of human capital to improve China’s position in global value chains.