Xuemei JIANG Center for Forecasting Science, Chinese Academy of Sicences

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


Outline

Background

Motivation

Method

Results


Background


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


Background

GRP Shares of Coastal and Inland Regions, 1980-2011


Background

Manufacture Shares of Coastal and Inland Regions, 1980-2011


Motivation of Paper

Empirically analyze the dynamics of production activity locations What factor leads to the de-concentration since 2003?


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


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


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


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


Descriptive Analysis

Location quotient: region k and industry i

Regional Specialization: region k

Industrial Concentration: industry i


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


Industrial Concentration, 1997-2007


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


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 =



Factor Endowments: Batisse and Poncent (2004)

Labor intensityi,k =

Capital intensityi,k =

Natural resources intensityi,k =



Supply Access: Zhao (2011)

Supply accessi,k =

Wage: Hering and Poncet (2009, 2010)

Wage costi,k =



International integration Dummy for coastal regions

Lagged independent variable share of output in industry i and region k in previous

period (2007 vs.2002)


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


Temporal Change

More important Supply access, Wage cost, Labor intensity, Market

potential

Less important Share in last period, Capital intensity

Resource: Not significant


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!


Comments & Questions

Email: [email protected]

Documents

Xuemei JIANG Center for Forecasting Science, Chinese Academy of Sicences