Contribution of producer services to productivity in manufacturing: some empirical evidence from P.R. China

This paper analyses the mechanism of how development of producer services improves the productivity of manufacturing through mathematical model. We argue that as an advanced input of manufacturing, producer services not only improve their own efficiency, but also reduce the unit producer cost of manufacturing, thus, enhance the manufacturing's competence. The empirical analysis which is based on the panel data of regions from 1998 to 2004 and industries from 1993 to 2003 supports our conclusion. Our findings are as follows: 1 The expansion of producer services promotes the productivity of manufacturing. 2 The impact of transportations, storages, posts and telecommunications on labour intensive industry is the most distinct. 3 The productivity enhancement of capital intensive industry is affected by the development of finance to a large extent. 4 Scientific research has lagged impacts on manufacturing industry, with negative correlation to manufacturing's productivity in the same year, but positive correlation to that of next year. It affects tech-intensive industry most.