(Institute for the Development of Central China)
Abstract :The transfer of industry is an important way to promote the transformation and upgrading of regional industries, where the increase of total factor productivity is the key goal. Based on the panel data of 347 cities in China from 2006 to 2015, this paper analyzes the impact of transfer of industry，both inward and outward, on regional total factor productivity. The results of the regional transfer of industries show that the transfers in the ten years in question exhibit the following characteristics.
•More transfers were realized from the eastern coastal regions to the central and western regions of the
country than the other way round.
•More transfers were realized from the central cities in a province to peripheral cities therein than the oth⁃
er way round.
•The transfers were considerably affected by the local policies concerning environment and ecology.
After considering the driving factors in the local economic development, the analysis by the fixed effect model shows that the transfer of industries did not contribute to the overall improvement of the local total factor productivity in the past ten years. Group regression further shows that while the outward-transfer region was positively affected with a remarkable coefficient of about 0.5%, the total factor productivity in the inward-transfer region, however, was significantly reduced by about 0.6%. The reliability of the results was further verified by the regression of the tool variables.
The study concludes that China's transfer of industries is more of the predatory nature, whereby the old-fashioned, resource-consuming industries move to less developed regions only to create more backwardness. It is therefore suggested that the inward-transfer regions should replace the pursuit of quantity with that of quality in their dominant mode of transfer of industry for economic growth, based on a reasonable development of industry resources, technological progress as well as integrated innovations.
Key Words: Manufacturing Transformation and Upgrading; Transfer of Industry; Inward; Outward; Total Factor Productivity