8. Industry Coordination in the Integration of the Yangtze River Delta: Analysis of Endogenous Relationship Between Manufacturing and Service Industry

From the data of input–output table, we can calculate the ratio of service capital goods in 16 industries and get the average ratio using total output of different industries as weight. The ratios of Jiangsu and Zhejiang in 2002 are 62.7 % and 62.1 % respectively. Those ratios reduce to 47.6 % and 59.9 % in 2005. In addition, we can rely on the ratio of intermediate demand to reflect the involvement of service department as intermediate production factors to other industries. This ratio is the proportion of intermediate input and final consumption in service industry (final consumption equals that total output minuses intermediate input and adds those brought in by other provinces and gross import). According to calculation, from 2002 to 2005, the ratio of intermediate demand of Shanghai stays the same, and that of Jiangsu experiences a downtrend, while that of Zhejiang is obviously increasing. Among this, financial insurance has greater influence. The ratio of intermediate demand of Jiangsu and Zhejiang’s financial insurance is 15.8 % and 6.1 % respectively in 2002. While in 2005, that of Jiangsu drops to 4.2 % and that of Zhejiang increases to 86 %. In addition, the important reason behind the decrease in the ratio of intermediate demand of Jiangsu’s service industry is wholesale and retail establishments of Jiangsu as intermediate input go down greatly.

The ratio of service capital goods of leasing and business services is even greater than100%. It is because the production values brought in by other provinces and by import in that industry exceed final demand department, leading to the situation in which total output is less than intermediate use.

The 42 departments in input–output table consist of 16 subdivided service industries. We neglect public management and social services organization because they have barely been used in manufacturing and have mainly been used in final demand department and the service industry.

Compared to Shanghai and Zhejiang, the investment of financial insurance of Shanghai into manufacturing is quite low, reaching 27.68 % in 2002. Although there is a great increase in 2005, the absolute value is only 37.06 % which seemingly does not match its position as a financial center. However, it exactly reflects Shanghai’s position as a financial center in the Yangtze River Delta region when we investigate deeply. Our statistical indexes are based on data from input–output table at the provincial level. Therefore, this proportion can not reflect the radiation effect of Shanghai’s financial insurance to manufacturing in the Yangtze River Delta and other places nationwide. There is no practical significance if we merely analyze the investment proportion of Shanghai’s financial insurance to local manufacturing.

We add up 16 subdivided service industries from intermediate input of different industries based on input–output table with 42 departments. It totally equals the classification of industry in the second part of Table 8.2.

We approximately select the industrial apartment to substitute manufacturing because of lacking segmentation indexes in manufacturing over the years.

Services of farming, forestry, animal, husbandry and fishery as well as construction industry are a part of service industry according to the classification standards of WTO.

Services here include 10 industries totally. They are listed as follows: transportation, warehousing, postal and telecommunication services; wholesaling, retailing, and catering; financial insurance; real estate; social services; health, sports and social welfare; education, literature and art, radio, film and television; scientific research and poly-technical services; state organs, political parties, public organizations and others.

The 16 cities mentioned above are listed as follows: Shanghai; Nanjing, Suzhou, Wuxi, Changzhou, Zhenjiang, Nantong, Yangzhou and Taizhou which are all in Jiangsu province; Hangzhou, Ningbo, Jiaxing, Huzhou, Shaoxing, Zhoushan and Taizhou that are all in Zhejiang province.

The coefficients of them are 0.58 and 0.02 respectively and they both pass the test under the confidence level of 1 %.

It can be also explained in this way: every equation in the system contains two exogenous variables excluded by the other equation and the proportion of regression coefficients is zero, therefore satisfying the condition of rank.

The regression coefficient of the lagged variable with three delayed period of service industry is 0.14 and is significant at the level of 10 %.