Download Contemporary Logistics Zhejiang Province

Contemporary Logistics 16 (2014) 1838-739X
Contents lists available at SEI
Contemporary Logistics
Journal homepage: www.seiofbluemountain.com
Influence Factor Analysis and Suggestions to Industrial GDP in
Zhejiang Province
Rui LI
Zhejiang Yuexiu University of Foreign Languages, P.R.China
KEYWORDS
ABSTRACT
Industrial GDP,
Technology level,
Industrial enterprises in Zhejiang
Province,
Influencing factors,
Regression analysis,
Innovation capability
Since the reform and opening up, the rapid development of Zhejiang industrial enterprises,
industrial output growth rate has remained stable overall. But in recent years, industrial
output growth rate fluctuates, and there is a downward trend. In 2009, due to the impact of
financial crisis, industrial output growth rate dropped to the bottom in nearly ten years
(2.95%). For the policy stimulus of central government and local government, in 2010 the
province's industrial output growth rate rebounded to an all-time high (20%), but in 2011 the
rate dropped to 15.8% again.
The author thinks that the impact of Zhejiang Province industrial production factors has two
aspects: the scale and efficiency, of which scale is the foundation, and the efficiency is the
key. This paper selects imported high-tech products, foreign direct investment, research and
development funding of industrial enterprises and other indicators as an important factor
affecting Zhejiang Province Industrial gross.
Through the establishment of regression model, the author draws the conclusion: the import
of high-tech products is the effective way to increase Zhejiang Province industrial gross; and
due to improper use of research and development funding, it cannot ascend industrial
enterprise innovation ability, thus it has adversely influence to Zhejiang province industry
growth.
© ST. PLUM-BLOSSOM PRESS PTY LTD
1 Introduction
Industry is the pillar industry of Zhejiang Province at present, only when the industrial foundation is solid, it can realize the rapid
development of the first industry and the third industry. But the current researches mostly focus on the efficiency of industrial
production in Zhejiang Province, and ignore the returns to scale brought by industrial scale. Therefore, this article plans to form a
system including the two aspects of Zhejiang Province: industrial scale and production efficiency use regression analysis to
understand the influence degree of each factor. It is hoped to understand Zhejiang Province industrial output from a more
comprehensive angle, and give some advice and suggestions to enhance Zhejiang Province industrial GDP.

Corresponding author.
E-mail: [email protected]
English edition copyright © ST. PLUM-BLOSSOM PRESS PTY LTD
DOI:10.5503/J.CL.2014.16.005
32
2 Zhejiang Province Industrial Production Development
According to Zhejiang Provincial Bureau of statistics data show (Table 1-1), Zhejiang Province industrial output value accounts for
more than 50%, it has become the important pillar industry of Zhejiang Province, which provides a solid material foundation and the
industrial foundation for the development of the first industry and the first industry in Zhejiang Province.
Table 1-1 Zhejiang Province industry (2003-2011)
Year
Industry gross (billion)
(P2002=100)
GDP (billion)
(P2002=100)
Zhejiang industrial
growth rate
Proportion of
industry gross
2003
5 096.38
9 705.02
24.59%
52.51%
2004
6 225.38
11 602.11
22.64%
53.66%
2005
7 328.77
13 724.84
14.63%
53.40%
2006
8 784.71
16 223.00
18.80%
54.15%
2007
10 564.02
19 510.53
19.30%
54.15%
2008
12 491.52
23 177.31
13.92%
53.90%
2009
13 670.01
26 391.11
2.95%
51.80%
2010
16 215.94
31 441.15
20.07%
51.58%
2011
19 508.73
38 083.82
15.79%
51.23%
Note: According to the Zhejiang statistical yearbook data.
Figure 1-1 Zhejiang industrial growth rate (2003-2011)
Through the Figure 1-1 it is clearly understands that, the development of industrial output value of Zhejiang in recent years is of
instability, which has restricted the influence of the external environment, but the author thinks that the efficiency of Zhejiang
Province’s industrial production not high is the larger key which cause of Zhejiang’s industrial output fluctuations.
3 Theoretical Studies on Influence Factors of Industrial Production Value in
Zhejiang Province
Industrial production determines the speed, scale and level of the modernization of the national economy, it plays a leading role. The
industry also provides raw materials, fuel and power for itself and other sectors of national economy in Zhejiang Province, industrial
supplies goods for people’s material and cultural life; and it is the main source of revenue in Zhejiang Province.
Industrial determines that Zhejiang Province industrial production as an important indicator of economic development reflects the
current situation and future development of industry in Zhejiang Province.
According to the general theory of interpretation, the author thinks that industrial production factors have two aspects: the industrial
scale, and the level of industrial efficiency.
The scale merit of industry can effectively reduce the cost of single commodity; industrial enterprises can greatly enhance the level of
profitability on the basis of international market support which is close to the unlimited market.
But with the law of diminishing marginal revenue of the various elements, gross industrial production inevitably tends to converge,
unable to achieve further breakthroughs.
At present, the cost of the elements of Zhejiang Province industrial production is rising, environmental cost more and more be
credited to the enterprise’s internal cost, if it is unable to realize the upgrades of technology and efficiency, Zhejiang Province
33
industry will hover at a lower level. So the level of production efficiency of industrial enterprises determines the development height
of Zhejiang Province industrial output value.
The technical level is an important manifestation of the production efficiency of industrial enterprises; the author thinks that the
efficiency level of industry in Zhejiang Province is mainly affected three aspects of trade, foreign direct investment and the digest
ability of the industrial enterprises.
Theoretical research and empirical research at home and abroad show that, trade and foreign direct investment could enhance the host
country’s technical level through the technology diffusion. Coe and Helpman 1 (1995) used the import as R&D, measured the degree
of the international technology diffusion and took the trade for the carrier. There found a significant positive correlation between
international R&D and the imported products. And Xu and Wang 2 (1999) also found that, if we only consider the capital goods
trade, not all merchandise trade, import products will create a very strong effect on international technology diffusion.
Yuko Kinoshita 3 (1999) summarizes the previous experience, considers that there are four effects of FDI on the host country's labor
productivity: display effect or propagation effects (observed or imitation, the demonstration effect); competitive effect; contact effect
and training effect (foreign-funded enterprises train local talent to high skills).
The fundamental purposes of technology import are digestion and absorption, and form their own unique technology innovation
ability 4, not get into the vicious circle of “technology import-backward technology—technology import again”. So the author thinks
that their technology digestion and absorption capacity of industrial enterprises is an important factor to affect the Zhejiang Province
industrial output value.
Overall, there are two factors aspect Zhejiang Province industrial output value: the scale and efficiency, of which scale is the
foundation, and the efficiency is the key.
4 Establish the Model
According to the analysis of the factors on affecting the industry in Zhejiang Province’s GDP in Part two, the scale and efficiency are
the two most important factors, and the efficiency factor is one of the key factors 5.
Through the analysis of the theory above, combined with the specific circumstances of Zhejiang Province industrial GDP, it is
feasible to choose the total value of imports of high-tech products, FDI, R&D of industrial enterprises in Zhejiang Province and the
last year’s industrial GDP to explain the current industry GDP. Models such as the equation (1), using the logarithmic form does not
only change the nature of the relationship between the variables, but also eliminate the heteroscedasticity phenomena between
variables.
lnYt=c0+c1lnITt+ c2lnFDIt+ c3lnRDt+ c4lnYt-1
(1)
And Yt and Yt-1 represent the gross industrial production of t years and t-1 years; ITt, FDIt, RDt represents the high-tech products
import, FDI and R&D funding amount of industrial enterprise of t year respectively; C0 means constants, C1, C2, C3, C4 mean the
coefficients.
5 Data Analysis
5.1 Data adjustment
We can get a preliminary data by the empirical data of Zhejiang Province Bureau of Statistics Yearbook, as shown in Table 4-1.
Table 4-1 Original data of analysis
Year
E
Industrial GDP
(billion)
P (last
year=100)
Import of high-tech
products (10 thousand
dollars)
FDI (10
thousand
dollars)
R&D
(billion)
2003
8.277
5 096.4
99.6
394 253
544 936
59.62
2004
8.276 8
6 250.4
102.7
460 750
668 128
91.10
2005
8.191 7
7 164.8
100.9
463 973
772 271
130.41
2006
7.971 8
8 511.5
100.8
674 404
888 935
183.39
2007
7.604
10 154.3
103.8
534 856
1 036 576
235.55
2008
6.945 1
11 567.4
106.3
865 412
1 007 294
283.73
2009
6.831
11 908.5
98.8
617 492
993 974
330.10
2010
6.769 5
14 297.9
103.9
895 664
1 100 175
407.43
2011
6.458 8
16 555.6
105.5
967 357
1 166 601
501.87
34
The gross industrial output value is calculated at current prices, it needs to be excluded the price factors. In order to accurately
understand the impact of high-tech products trade in Zhejiang Province to the efficiency of industrial technology, in the course of the
study the author only selects imports of high-tech products as the main index. The foreign direct investment amounted to unified
measurement units. At the same time, the actual FDI is converted to the industrial amount according to the proportion of industrial
output.
According to the above the data are as shown in Table 4-2.
Table 4-2 Adjusted data of analysis
Year
Industrial GDP
(billion)
(P2002=100)
Import of
high-tech products
(billion)
Industrial FDI
(billion)
Industrial
enterprises R&D
(billion)
2003
5 096.38
326
236.855 7
59.62
2004
6 225.38
381
296.722 9
91.10
2005
7 328.77
380
337.806
130.41
2006
8 784.71
538
383.727 3
183.39
2007
10 564.02
407
426.779 4
235.55
2008
12 491.52
601
377.039 7
283.73
2009
13 670.01
422
351.698 4
330.10
2010
16 215.94
606
384.115 8
407.43
2011
19 508.73
625
385.978 1
501.87
In this paper, EVIEWS6.0 is selected to be the data analysis tool.
5.2 Regression analysis
The coefficient values are created through regression analysis by the software, shown as equation (2).
lnYt=972.3+2074.8lnITt+11.41lnFDIt-4817.4lnRDt+1.6lnYt-1
(0.3)
(4.5)
(5.0)
(-5.0)
R2=0.999 3 D.W=2.84 F=1 116.55
(2)
(14.5)
T=8
5.3 Model testing
First, residual normality test
The results of the residual normality test of results of equation (2) are shown in Figure 4-1. The probability of Jarque-Bera is 0.84,
greater than the significance level of 5%, which showed that the normality hypothesis of random disturbance term is accepted.
Figure 4-1 Results of residual normality distribution test
3
Series: Residuals
Sample 2004 2011
Observations 8
2
1
0
-250
-200
-150
-100
-50
0
50
100
35
150
200
Mean
Median
Maximum
Minimum
Std. Dev.
Skewness
Kurtosis
-1.14e-12
10.40016
171.3107
-213.0801
117.7431
-0.477556
2.643825
Jarque-Bera
Probability
0.346367
0.840983
Second, autocorrelation test
The results of autocorrelation test are as Table 4-3.
Table 4-3 Results of autocorrelation test
Obs*R-squared
Significance level
Conclusion
1st order
3.692 097
5%
Without 1st order autocorrelation
2nd order
7.557 407
5%
Without 2nd order autocorrelation
6 Interpretations of Result and Suggestions
6.1 Interpretation of result
Through the above data analysis it could be seen, that the industrial GDP of Zhejiang Province is affected by the four factors as
follows: high-tech products trade, FDI, R&D funding of industrial enterprises and the former industrial output.
The first, the high-tech products trade plays an obviously boost.
The second, the actual FDI and former industrial GDP have a limited positive influence on the industrial GDP.
The third, the growth of R&D funds of industrial enterprises has weakened growth trend of industrial GDP. The R&D fund is from
the capital which is used to expand production, once the R&D is not properly used, it cannot effectively improve enterprise
innovation ability. So in this case increasing R&D will reduce the scale of the enterprise, also reduce the returns to scale. It also
shows that the chain “import-digestion-absorption-innovation” showing the advantage of backwardness is broken.
6.2 Suggestions
The first, industrial enterprises need to improve the efficiency on using R&D funds, pay attention to the soft technology import and
the high-tech products import. Also need to strengthen the training of employees, strengthen the industry-university-research contact
with the industrial enterprises and local colleges, in order to improve the innovation capability of the industrial enterprises.
The second, it needs to increase the high-tech products import, strengthen the positive role of the high-tech products import in
industrial GDP.
The third, expanding foreign direct investment, transferring backward technology and industry into abroad, to extend the profit of
industry.
7 Conclusion
At present, there is a downward trend of Zhejiang’s industrial GDP. Through regression analysis, we can learn that imports of
high-tech products have a positive effect on Zhejiang’s industrial GDP. But because of the misusing of industrial enterprise R&D, it’s
unable to enhance technology digestion and absorption ability effectively, and the ability of innovate must not be traded. So for the
industrial enterprises in Zhejiang Province, the pressing matter of the moment is to improve efficiency in the use of R&D funds, and
pay attention to the cultivation of technology digestion and absorption ability, but not simply technical import.
References
[1]. Coe D.T., E. Helpman. International R&D spillovers [J]. European Economic Review, 1995, 39 (5): 859-887
[2]. XU, B., WANG J.. Capital Goods Trade and R&D Spillover in the OECD, Canada Journal of Economics, 1999 (32):
1258-1274
[3]. Yuko Kinoshita. Technology Spillovers Through Foreign Direct Investment. The William Davidson Institute at the Univ. of
Michigan Business School, Working Paper, 1999-1: 221
[4]. DAI Hongwei. International Industry Transfer and the Development of Manufacturing Industry in China. Beijing: People’s
Publisher House, 2006: 45-47 (in Chinese)
[5]. HE Yuping, QIN Haijing. Technology Monopoly and Diffusion in the Process of Globalization. Beijing: Science Press, 2009:
33-37 (in Chinese)
36