The Interplay Between Financialization And De-industrialization: Macro Manifestations And Micro Mechanisms

Along with the trend of financialization and de-industrialization in various countries,China’s economy has also emerged as a "de-realization to deficiency" problem.Under the policy of promoting high-quality development of manufacturing industry and financial services to the real economy,this paper attempts to study the two-way influence mechanism between financialization and deindustrialization.Firstly,this paper returns to the relevant literature and compares the theories of financialization,deindustrialization and the relationship between the two,and finds that there are many studies on financialization,deindustrialization and the relationship between finance and real economy,but not many studies on the relationship between financialization and deindustrialization,and the research perspective is not comprehensive.Second,this paper further analyzes the country differences and the reasons behind them by presenting typical facts about the process and relationship between financialization and deindustrialization in representative countries.Again,this paper analyzes the mechanisms of the interaction between financialization and deindustrialization under macro-not considering openness,macro-not considering openness,and micro perspectives,and then proposes three propositions respectively.Proposition 1: There is an inverted L-shaped relationship between financialization and deindustrialization under macro-not considering openness perspective.Financialization promotes industrialization when the level of financialization is low,leads to deindustrialization when the level of financialization deepens,and deindustrialization in turn intensifies financialization.Proposition 2:Under the macroscopic consideration of openness,the effect of financialization promoting industrialization weakens when the level of financialization is low,and the effect of financialization promoting de-industrialization strengthens when the level of financialization is high;the effect of de-industrialization promoting financialization strengthens.Proposition 3: In the micro perspective,the weakening of firm innovation in the context of financialization accelerates the process of deindustrialization;deindustrialization inhibits firm innovation,firm innovation inhibits financialization,and deindustrialization promotes financialization.Again,this paper empirically tests the three propositions using cross-country panel data and Chinese enterprise data respectively.Under the macro condition without considering openness,a two-way fixed-effect model is constructed using the joint cubic system model and instrumental variables,and Proposition 1 holds;under the macro condition with considering openness,a two-way fixed-effect model is constructed by adding the moderating variables of trade level on the macro level,and Proposition 2holds.At the micro level,the two-way fixed-effect model is constructed by taking enterprise innovation as the mediating variable,and Proposition 3 holds.Finally,based on the research results,the paper draws conclusions and draws shortcomings,and proposes targeted policy recommendations based on the analysis of country differences: strengthening financial regulation,adjusting industrial structure,strengthening international cooperation,optimizing education and training system,etc.For China,the paper also proposes differentiated policy recommendations,including strengthening the reform of state-owned enterprises,developing green finance,regional differentiated policies,and popularizing financial education,etc.