Service Outsourcing from Manufacturing and Productivity Growth of Services in China

Service outsourcing not only influences resource integration and productivity improvement in the manufacturing industry, but also has a spillover effect on service industry. This paper, using an econometric model, verifies that service outsourcing in manufacturing industry does have impacts on total output, labor mobility, productivity and hysteretic nature of the productivity improvement in the service industry. The research results demonstrate that:In the short term, service outsourcing in manufacturing industry leads to obvious increase both in output and in labor input of service industry;Although the net effect on the productivity service industry is uncertain,it aggravates the extent of lag of the productivity growth rate in service industry;In the long run, the hysteretic impacts that the service outsourcing have on the service productivity recede;Moreover, through service innovation to reduce the labor input and improvement of the growth rate of productivity,service industry will narrow the gap with manufacturing industry.