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Distribution Activities, Market Segmentation and Depth of Production Fragmentation in Domestic Value Chain

【Authors】
SHEN Jianfei
【WorkUnit】
North China Electric Power University, 102206.
【Abstract】

Deepening the division of labor in domestic value chain on the basis of regional advantages is an important way to improve the overall competitiveness of “manufacturing in China”, and the distribution activities and market segmentation can have important impact on this process. This paper estimates the depth of production fragmentation in major regions of China, and studies the influencing factors and mechanism. The results show that the depth of inter-regional production fragmentation in China is rising on the whole, but has declined after China's entry into WTO and the sub-prime mortgage crisis. Activities related to business flow can support the extension of the inter-regional production fragmentation; in some cases, the construction of logistics infrastructure may promote the division of labor between regions, but the effect may also be limited to the local area. Market segmentation will hamper the inter-regional economic activities, preventing the role of factors in promoting inter regional production fragmentation and strengthening the hindrance effect of adverse factors. In the future, more attention should be paid to the requirements of trans-regional transportation in infrastructure construction, and at the same time efforts should be made to develop middle-man based business links and eliminate administrative barriers, with a view of supporting the modern production fragmentation with a unified and integrated intermediate goods market.

JEL:N7, O14

【KeyWords】
Inter-regional Production Fragmentation, Value Chain, Infrastructure, Trade of Intermediate Goods, Market Segmentation