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Interindustry Factor Allocation and Trade Network Status

Author

Listed:
  • Wang Xiaosong

    (China Economic Reform and Development Research Institute, Renmin University of China, School of Economics Renmin China)

  • Zhou Yuding

    (School of International Trade and Economics, University of International Business and Economics Beijing China)

Abstract

Against the backdrop of production and sales globalization, a country can utilize its trade network position to secure greater benefits from international trade and gradually enhance its economic and trade influence. This process is inseparable from the rational allocation of production factors. As a crucial cornerstone of China’s economic growth, the industrialization system represented by the manufacturing sector has achieved significant development over an extended period. However, in recent years, influenced by multiple factors, the level of factor allocation within the industrial system has shown a rapid decline. Based on theoretical and empirical analyses, this study demonstrated that a rapid decline in the efficiency of production factor allocation has significantly lowered the position of Chinese industries in the global trade network, which is especially evident in the export trade network. A mechanism analysis revealed that an excessive decline in factor allocation efficiency exacerbates resource misallocation, increases production costs, and dampens regional entrepreneurial activity, thereby undermining industries’ positions in the global trade network. However, abundant human capital, the advancement of new industrialization, well-functioning market mechanisms, and proactive industrial policies significantly mitigate these adverse effects.

Suggested Citation

  • Wang Xiaosong & Zhou Yuding, 2025. "Interindustry Factor Allocation and Trade Network Status," China Finance and Economic Review, De Gruyter, vol. 14(2), pages 66-86.
    • Handle: RePEc:bpj:cferev:v:14:y:2025:i:2:p:66-86:n:1004
    DOI: 10.1515/cfer-2025-0010
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