The construction of the “New Silk Road Economic Belt” will inevitably expand the development scale of foreign trade in economic belt relevant area. Based on the data from 1990 to 2013 in Shaanxi Province, this paper analyzes the economic correlation effects of foreign trade on the upgrading of industrial structure in Shaanxi province by using gray relation analysis method. Results show that the foreign trade is highly correlated with GDP and three industrial added values. Moreover, performance of foreign trade and upgrading of industrial structure of Shaanxi Province are also analyzed by using Co-integration and Granger test. It is found that foreign trade has the most promotion to the third industry, the second industry follows, and the first industry least. That is to say, foreign trade of Shaanxi Province is constantly promoting industrial structure shift from “Two ? Three ? One” model to the “Three ? Two ? One” model.
In the background of open global markets, international element has become an important influence factor of industrial structure upgrading in a country. In August 2013, President Xi Jinping has put forward the concept of “New Silk Road Economic Belt”. This idea writes a new chapter for China’s opening up. The total population reaches 3 billion along New Silk Road Economic Belt, so market development potential is great. By constructing transportation network and enhancing trade flow, trade between China and the countries in Asia and Europe is expanded, which can promote country’s economy development and upgrading of industrial structure. As the starting of the ancient Silk Road, and also the strongest province of economy and innovation in the Northwest of China, Shaanxi Province is the hub and logistics center of New Silk Road Economic Belt. Studying foreign trade of Shaanxi section along New Silk Road has a great significance for the upgrading of industrial structure.
With the development of global economic integration, how to grasp the opportunity of international industrial transfer, and promote the upgrading of industrial structure through foreign trade, has become an important issue for scholars to study. Raymond Vernon (1966) proposes that industry leading countries should combine the evolution of the industrial structure with the development of the international market closely, by participating in the international division of labor to drive industrial structure evolution from labor-intensive to capital technology intensive [
Michaely (1997) by using the production function model, it can be found that the export can improve the total factor productivity through the optimization, distribution, full use of resources and technology transfer, and thus promote the adjustment of industrial structure [
Domestic scholars study the effect of foreign trade on the upgrading of industrial structure mainly from the theoretical and empirical perspective. Shenyu Ji (2001) uses “vent for surplus theory”, international complementary theory which promotes the national production process and the theory of “Goose Model”, and then discusses the effect of foreign trade on China's industrial structure upgrading from the four aspects [
Shaanxi Province is an important area of the New Silk Road Economic Belt. This paper aims to study the influence mechanism and specific performance of foreign trade on its upgrading of industrial structure by empirical methods. Government should seize the opportunity of building New Silk Road Economic Belt, and change its industrial structure strategically, which can not only promote economic growth but also optimize the industrial structure of the region.
With the opening of the international market, economic exchanges between Shaanxi and foreign increasingly close, the foreign trade is continuously expanding. As is shown in
first industry in Shaanxi province decreases year by year, from 26.11% in the early 1990s down to 9.51% in 2013. The second industry accounted for the proportion of GDP rises roughly, up from 41.29% in 1990 to 55.54% in 2013. Except for individual years, the proportion of the tertiary industry has been increased steadily. According to the classification criteria for the industrial structure based on Sai Erkui measure, in recent years, industrial structure of Shaanxi Province shifts from the middle stage of industrialization to the late stage of industrialization. That is to say, foreign trade of Shaanxi Province not only stimulates the regional economic growth, but also promotes the regional industrial structure optimization to some extent.
Grey Correlation Analysis is a method of measuring the degree of association among variables by the similarity or dissimilarity of the developing trends of time series variables. If the two trends are consistent or similar, it shows that the correlation between the two is high; otherwise, it is low. This paper selects data of total GDP, three industrial added values and foreign trade from the “Statistical yearbook of Shaanxi province” in 1990-2013, Gray correlation analysis method is used to examine the correlation degree between the variable sequences, which can roughly reflect the impact of foreign trade on upgrading of industrial structure in Shaanxi Province.
Value of foreign trade and GDP of Shaanxi Province from 1990-2013 is shown in
Firstly, make the foreign trade volume sequence as a reference sequence
Empirical analysis shows that the total import and export is closely related to GDP in Shaanxi Province, foreign trade and economic growth are highly correlated. From the industrial structure, foreign trade has the highest correlation with added value of the third industry in Shanxi Province, followed by the second industry, and the third industry has lowest correlation, which illustrates that foreign trade is constantly pushing the shift of industry structure towards a more advanced stage in Shaanxi Province.
These effects occurred has an important relationship with foreign trade structure in Shaanxi Province. In recent years, trade structure of Shaanxi Province transforms from exports of primary products, imports of manufactured goods to exports of high-end industrial products, imports of raw materials. In 2011, exports of heavy industrial products like aircraft, heavy vehicles are ranking the first in the country, that is to say, the increasing demand of foreign markets for high-end industrial products can stimulate domestic supply increase. To meet market demand, Manufacturers begin technological innovation and adjust the product structure to promote the development of the second industry. On the other hand, the proportion of the emerging information industry, biological medicine, and photovoltaic industry in the import and export market grows rapidly in Shaanxi Province. The introduction of high-new technology and related products not only injects new vitality for the third industry but also promotes the development of the third industry in the region. Therefore, the correlation between foreign trade and added value of the second industry, added value of the third industry is high, but the correlation with added value of the first industry is relatively low.
The above arguments only analyze the economic relevance effect of foreign trade on industrial structure in Shaanxi, but the analysis is only for their relations between the two variables. It needs more specific analysis on influence of foreign trade on the upgrading of industrial structure in Shaanxi Province.
Balassa, a professor at Johns Hopkins University, proposed the export expansion production function in 1978.
In the formula, Y, L, K, X, respectively, said total output, labor input, capital input and export volume.
Because this paper is to examine the impact of foreign trade on the industrial structure, the labor and capital in the function of two variables are removed. Also because import trade has a greater impact on the upgrading of industrial structure, the export volume of the function is extended to the total amount of import and export trade. The following regression model is shown:
Among
Before the Co-integration test, ADF unit root test is taken firstly for each variable in order to determine the stability of each time series. The results of the test are shown in
It can be known from the above table: The time series of the total foreign trade and the three industrial added values cannot reject the original hypothesis at the significant level of 10%, which all exist in the unit root and is not stable at the level of the sequence. After the first-order difference, four variables were rejected by the null hypothesis. That is the sequence of first order to maintain stable.
Co-integration relationship can indicate a long term equilibrium relationship between variables. LnTrade, LnGDP1, LnGDP2 and LnGDP3 are all first order single integration, which satisfies the condition of co integration test. And then, EG two step methods were used to explain the variables and the sequence of the explanatory variables in order to test the Co-integration relationship. The results are shown in
From the coefficients of each variable of the three Co-integration equations in
The unit root test is performed on the residual sequence ei. The results are shown in
Variable | ADF Statistics | Critical Value | Verification Model | Conclusion |
---|---|---|---|---|
LnTrade | −2.599 | −3.261* | (C, T, 2) | Unstable |
LnGDP1 | −0.610 | −3.255* | (C, T, 1) | Unstable |
LnGDP2 | −1.302 | −3.261* | (C, T, 1) | Unstable |
LnGDP3 | −3.169 | −3.261* | (C, T, 2) | Unstable |
ΔLnTrade | −2.868 | −2.679*** | (0, 0, 2) | Unstable |
ΔLnGDP1 | −3.207 | −3.012** | (C, 0, 2) | Unstable |
ΔLnGDP2 | −2.991 | −2.646* | (C, 0, 2) | Stable |
ΔLnGDP3 | −2.646 | −2.332 | (C, 0, 2) | Stable |
Notes: *indicates a significant level of 10%, **indicates a significant level of 5%, ***indicates a significant level of 1%. In the verification model, the first parameter indicates that there is no constant term; the second parameter indicates that there is no time trend term; The third parameter indicates lagged rank (on the basis of AIC and SC principles).
Variable | C | LnTrade | R2 | S.E. | F |
---|---|---|---|---|---|
LnGDP1 | 1.776 | 0.749 | 0.941 | 0.179 | 351.461 |
LnGDP2 | 0.609 | 1.183 | 0.949 | 0.263 | 409.729 |
LnGDP3 | 0.807 | 1.207 | 0.953 | 0.235 | 450.718 |
Variable | ADF Value | Critical Value | Verification Model | Conclusion |
---|---|---|---|---|
RE1 | −2.878 | −2.674*** | (0,0,0) | Stable |
RE2 | −3.209 | −3.005** | (0,0,0) | Stable |
RE3 | −3.749 | −3.633** | (0,0,0) | Stable |
The analysis above shows that the relationship between foreign trade volume and the value added value of the three industries in Shaanxi Province, but the causal relationship between foreign trade volume and the value added of the three industry needs to be further proved, using Grainger causality test to verify the method. Test results are shown in
As can be seen from
The analysis of the reasons for the change of the added value of foreign trade in Shaanxi Province in the first industry: in 2011, the export volume of concentrated apple juice in Shaanxi Province ranked first in the country, and exceeded 1/3 of the world; this has effectively promoted the development of the first industry in Shaanxi Province. In 2014, grain import volume of Shaanxi Province reached 106 million tons. It also introduces a number of genetically modified crops, regulates the wheat varieties, imported Australian dairy cattle and bred new varieties, which could enhance the content of science and technology, improve the output rate and effectively promote the optimization of agricultural structure.
The analysis of the reasons for the mutual influence of foreign trade and its value added of second industry in Shaanxi Province: in recent years, foreign trade structure of Shaanxi Province, which is from the previous import of industrial products and exports of primary products to import raw materials and exports of high value-added industrial product conversion, is continuous adjustment and optimization. The industrial products, such as mechanical and electrical products and aircraft and heavy vehicles and so on, have become the main force in the export market of Shaanxi Province. And the export volume in the country is among the best. These export demands stimulate the development of the second industry on the whole, because of these high value-added industrial products export demanded, which can guide the Province resources and transfer of personnel to the high-end and emerging industries. Simultaneously, advanced technology and management enable manufacturers to produce more advantageous products relative to other countries, in order to promote the development of foreign trade when the second industry has been developed and optimized.
The analysis of the reasons for the change of the added value of foreign trade in Shaanxi Province in the third industry: with the introduction of a series of high-tech companies such as Samsung and the development of high-tech industrial park and the construction of Xi'an port area, these vigorously promote the development of relevant transportation and warehousing logistics. In addition, the software and service outsourcing industry of Shaanxi has also been rapid development, and the total revenue in 2014 amounted to RMB 136 billion. The industry such as Newly-emerged information industry, biological medicine or photovoltaic (PV) in the import and export market of Shaanxi, the proportion of which has rapid growth. Not only is the introduction of high-tech and related products to inject vitality into the third industry of Shaanxi Province, but also Technology Spillovers promotes the development of the third industry in the region. Conversely, it promotes the expansion of foreign trade with the development of the third industry.
Null Hypothesis | F Value | P Value | Test Result |
---|---|---|---|
LnTrade is not the cause of Grainger LnGDP1 | 4.56 | 0.03 | Reject the null hypothesis |
LnGDP1 is not the cause of Grainger LnTrade | 0.36 | 0.70 | Accept the null hypothesis |
LnTrade is not the cause of Grainger LnGDP2 | 2.91 | 0.08 | Reject the null hypothesis |
LnGDP2 is not the cause of Grainger LnTrade | 3.73 | 0.05 | Reject the null hypothesis |
LnTrade is not the cause of Grainger LnGDP3 | 3.77 | 0.05 | Reject the null hypothesis |
LnGDP3 is not the cause of Grainger LnTrade | 2.63 | 0.10 | Reject the null hypothesis |
Empirical studies above have shown that foreign trade, economic growth and three industrial added value in Shaanxi Province are highly correlated, in ensuring the long-term stable development of its economy, but also continue to promote its industrial structure transforming from the current stage of the two • three • one mode to the three • two • one mode. The construction of new Silk Road economic belt provides a new opportunity for foreign trade in Shaanxi Province.
Haizhen Yang,Wenping Zhao, (2016) Research on the Influence of Foreign Trade on Upgrading of Industrial Structure in Shaanxi Province —Empirical Analysis Based on New Silk Road Economic Belt. Open Journal of Business and Management,04,528-534. doi: 10.4236/ojbm.2016.43057