Study On Contribution Of Service To Industrial Productivity

Since 2008,the proportion of added value in service industry has rapidly risen and the service industry has become the largest industry in the national economy since 2013.China’s economy is going through a transition from "industrial economy" to "service economy." Some scholars pointed out that by 2020 China’s economic growth is still mainly driven by the secondary industry.Moreover,from the perspective of industrial convergence,manufacturing as a crucial part of industry has been shown to have significant positive externalities and contributes a lot to the country’s innovation and competitiveness.The development of service industry is closely linked with industry.The development of service industry and industry faces two major challenges in the transition period: one is the coordination failure,the decline of the industrial proportion could cause industrial depression,which will hinder the long-term improvement of industrial efficiency.The other is that the fast-increasing proportion of the service industry would decrease the quality improvement by failing to support knowledge as the core factor.Facing these two challenges,studying the impact of service industry’s own productivity and industrial structure on industrial productivity based on the perspective of industrial integration can help clarify the development of service industry in transition and find out the key points of industrial development.Panel data fixed effect(FE)model is applied to empirically study the effect of total factor productivity(TFP)and input factor allocation of Service sector on industrial TFP based on industry level panel data of Industry and Service sector between 2005 and 2015.Estimation from Stochastic Frontier Analysis(SFA)shows that average TFP of both Industry and Service grew in a positive rate,and the growth of industrial TFP is faster than of Service.According to empirically research,it is found that TFP and the increasing proportion of the labor force in “Industrial Supporting Services”,which are industries closely related to Industry,have significant positive effects on industrial TFP,and the latter factor influences more significantly,whereas the increasing capital input in Industrial Supporting Services only shows little effect.Considering the effect on Industrial TFP growth,the proportion of the capital in Industrial Supporting Services shows significant positive effects.