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Effects of Cost Factors on National Manufacturing Based on Global Perspectives

Fangtao Liu (), Yong Ding (), Jia Gao () and Pu Gong ()
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Fangtao Liu: School of Public Policy and Management, Tsinghua University, Beijing 100084, China
Yong Ding: School of Mechanical, Electronic and Control Engineering, Beijing Jiaotong University, Beijing 100044, China
Jia Gao: Business School, University of International Business and Economics, Beijing 100088, China
Pu Gong: School of Public Policy and Management, Tsinghua University, Beijing 100084, China

Economies, 2017, vol. 5, issue 4, 1-16

Abstract: Currently, the real economy is the important basis for the development of a country, especially after the global financial crisis in 2008. Given that the manufacturing industry is the main part of the national real economy, many developed and developing countries have paid considerable attention to its significance. This study focused on cost factors given that they influence national manufacturing development. Initially, this study proposed two elements, namely, manufacturing development scale and manufacturing development level, to evaluate national manufacturing development from two aspects: quantity and quality. Subsequently, we extracted a series of cost factors on the bass of the theoretical framework and literature, including labor costs, financing costs, tax and rental costs, energy and raw materials, foreign trade exports and business environments. On the basis of the data of 13 main manufacturing countries around the world from 2000 to 2015, we tested the influence degree of each cost element index on the scale and level of national manufacturing industry development through a two-way fixed effects model and incorporated it with the development of China’s manufacturing industry as a case study. Finally, we deduced the future development trend of the manufacturing industry by specifically analyzing the cost factors affecting the development of this industry and provided policy suggestions. The main innovation and contribution of this study including: to comprehensively evaluate the national manufacturing development from two aspects, namely, “quantity” and “quality”; to identify the impact of national cost of the six elements; to demonstrate and determine the extent of its impact on the development trend of manufacturing sector and carry out pre-judgment through empirical research on each indicator; to provide policy recommendations targeted for each of the indicators.

Keywords: national manufacturing scale (NMS); national manufacturing level (NML); national cost factor; global perspectives; two-way fixed-effects model (search for similar items in EconPapers)
JEL-codes: E F I J O Q (search for similar items in EconPapers)
Date: 2017
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