A Research On The Fragmentation Of Production And The Influential Factors In China

What is the average number of production stages for Chinese-made products?Is production more fragmented compared to 20 years ago?Why there are differences between the fragmentation of production for different industries?Is China more or less fragmented in production compared with the major countries?What impact does the development of international trade have on different industries in China,as long as the fragmentation of production over the world?To answer these questions,based on Fally(2011)’s research,I use input-output tables to develop two simple measures of vertical fragmentation of production chains.These two measures are developed across different plants in a single economy,rather than different countries over the world.In the research of fragmentation of production over the world,I find that developed countries usually have smaller measures of production stages,and their production is becoming less vertical fragmented;The developing countries are just the opposite.The reason may be the production outsourcing and industrial transfer from developed countries to developing countries.The research of fragmentation of production in China shows that,production has become more vertical fragmented in China over the past 20 years.Part of the reason seems to be a shift of value-added towards industries that are far away from the final demand.The other part of reason for this increase corresponds to the changes of fragmentation of production in different industries.I also find in the research that among all industries,there are systematic differences between industries depending on various industry characteristics.Generally speaking,industries with high R&D intensity and capital intensity are usually more fragmented,value-added of service sector seems to have a negative influence on vertical fragmentation and,particularly,international trade does provide new opportunities to fragment production.