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Center for Forecasting Science, CAS
Specialization and its changes in Chinese Provinces: Does the international integration still matter?
(PRELIMINARY WORK)
Xuemei JIANGCenter for Forecasting Science, Chinese Academy of Sicences
Center for Forecasting Science, CAS
Outline
Background
Motivation
Method
Results
Center for Forecasting Science, CAS
Background
Center for Forecasting Science, CAS
Background
Volume
Area Under Land
Survey(10 000 hectares)
Total Populations
(100 000 persons)
Proportion of Urban
Population
Gross Regional
Product(in billion RMB)
Total Trade Volumes (USD 10 million)
Foreign Direct Investment
(100 million USD)
Coastal 10815 5177 665 16337 199324 17369
Inland 84254 7815 803 11225 18048 3258
Sum 95069 12992 1468 27562 217373 20627
Share
Coastal 11.4% 39.9% 45.3% 59.3% 91.7% 84.2%
Inland 88.6% 60.1% 54.7% 40.7% 8.3% 15.8%
Main Indicators of Coastal and Inland Regions in China, 2007
Center for Forecasting Science, CAS
Background
GRP Shares of Coastal and Inland Regions, 1980-2011
Center for Forecasting Science, CAS
Background
Manufacture Shares of Coastal and Inland Regions, 1980-2011
Center for Forecasting Science, CAS
Motivation of Paper
Empirically analyze the dynamics of production activity locations What factor leads to the de-concentration since 2003?
Center for Forecasting Science, CAS
Literature Review
Concentration since 1990s • Batisse and Poncet (2004), Economic Geography• Ma (2006), The World Economy• De Sousa and Poncet (2007), Regional Science and Urban
Economics• Amiti and Javorsik (2008), Journal of Development economics• Hering and Poncet (2009, 2010) China Economic Review & The
Review of Economics and Statistics
Highlights the role of economic geography• Factors: international integration
Center for Forecasting Science, CAS
Literature Review
Summary of the factors: International Integration
• Biased Opening-up Policy, FDI Flow & Exports Factor Endowments
• High- Skilled Labor & Capital Market Potential
• Increased return to scale Access to Suppliers Local Protectionism
Center for Forecasting Science, CAS
Literature Review
De-concentration since 2003 Descriptive Analysis: Wu and Li, 2010; Zhao, 2011 Congestion Cost
• Higher land and labor cost in coastal regions due to concentrations
Center for Forecasting Science, CAS
Motivation of Paper
Empirically analyze the dynamics of production activity locations What factor leads to the de-concentration since 2003? Does the international integration still matter?
Database: Regional input-output tables, 1997-2007 Sectoral level
• Access to suppliers Supplementary database: labor
Center for Forecasting Science, CAS
Descriptive Analysis
Location quotient: region k and industry i
Regional Specialization: region k
Industrial Concentration: industry i
Center for Forecasting Science, CAS
Regional Specialization, 1997-2007
Coastal199
72002 2007 Central 1997 2002 2007 West 1997 2002 2007
BJ 1.23 1.20 1.18 AH 0.89 0.94 0.97 CQ 0.96 0.87 0.91
FJ 1.01 1.07 1.04 HB 0.92 0.95 0.97 GS
1.06 0.92 0.92
GD 1.09 1.05 1.05 HN 0.95 1.03 1.11 GX
0.90 0.86 0.85
JS 0.96 0.94 0.94 HLJ 1.12 1.11 1.02 GZ
0.82 0.84 0.99
LN 1.04 1.02 0.95 HB 0.94 0.96 1.00 IM 0.93 0.97 1.02
SD 1.02 1.00 1.00 HN 1.00 0.95 1.02 NX
0.97 1.00 0.95
SH 1.07 1.00 0.95 JL 0.97 0.87 0.92 SsX
0.99 0.96 1.00
TJ 1.08 0.98 0.92 JX 0.99 0.94 0.97 SC 0.90 0.96 0.92
ZJ 0.96 1.05 1.05 SX 1.13 1.23 1.06 YN
0.85 0.81 0.84
Mean1.05
2 1.03
5 1.01
0 Mean 0.992
0.998
1.003
Mean0.93
1 0.91
9 0.93
3
Center for Forecasting Science, CAS
Industrial Concentration, 1997-2007
Center for Forecasting Science, CAS
Industrial Concentration, 1997-2007 (cont.)
1997 2002 2007
21 Electricity, gas and water production and supply 1.10 1.07 1.21
22 Construction 1.05 1.19 1.27
23 Transport and storage, post and telecommunication 1.11 1.10 1.12
24 Wholesale and retail trade, catering trade 1.03 1.04 1.07
25 Finance and insurance 1.04 1.00 0.96
26 Real estate 0.91 1.00 0.98
27 Social services 1.00 0.96 0.94
28 Health services, sports and social welfare 1.05 1.16 1.19
29 Education, culture and arts, radio, film and television 1.08 0.95 1.09
30 Scientific research and general technical services 1.20 1.07 1.09
31 Public administration and other sectors 1.13 1.12 1.26
Center for Forecasting Science, CAS
Method: Empirical Model
Dependent variable: share of output in industry i and region k
Independent variable Market potential: Harris’s concept
Market Potential i,k =
Center for Forecasting Science, CAS
Method: Empirical Model
Factor Endowments: Batisse and Poncent (2004)
Labor intensityi,k =
Capital intensityi,k =
Natural resources intensityi,k =
Center for Forecasting Science, CAS
Method: Empirical Model
Supply Access: Zhao (2011)
Supply accessi,k =
Wage: Hering and Poncet (2009, 2010)
Wage costi,k =
Center for Forecasting Science, CAS
Method: Empirical Model
International integration Dummy for coastal regions
Lagged independent variable share of output in industry i and region k in previous
period (2007 vs.2002)
Center for Forecasting Science, CAS
Results
with *, ** and *** denoting the significance at 1, 5 and 10% level.
02&07 2002 2007 inland coastal
Fixed effects Fixed effects
cap .004 .009* -0.005* .017*** -0.044
lab .185* .105* 0.252* .077* 0.420*
resource -.001 .001 -0.013 .006 -0.003**
supply access .004* -.090* 0.035* -.177* 0.031**
market potential .246* .220* 0.299* .386* 0.106*
wage cost .249* .199* 0.250* .211* 0.516**
lag .524* .685* 0.394* .580* 0.440*
Obs. No 1674 837 837 1240 434
R2 0.80 0.83 0.83 0.86 0.86
Center for Forecasting Science, CAS
Temporal Change
More important Supply access, Wage cost, Labor intensity, Market
potential
Less important Share in last period, Capital intensity
Resource: Not significant
Center for Forecasting Science, CAS
Coastal vs.Inland regions
More important Supply access, Labor intensity, Wage cost
Less important Capital intensity, Market potential, Share in last period
Resource Only significant in coastal regions
Role of international integration: Decreased!