Abstract:

This paper discusses how division of labor and technology progress affects value added rates. First, an input-output model for analyzing value added rates is built, and used to investigate the relations between division of labor and value added rates theoretically. Then by using world input-output tables in current and previous year prices, the effects of international division and specialization are an-alyzed empirically. The main results are as follows. First, division of labor without technology progress and efficiency improvement will certainly cause decrease in value added rates. However, division of labor accompanying technology advance and efficiency increases has different effects:for the industry where division of labor originates, its value added rate does not necessarily decrease, and may increase in some occasions; for other industries, their value added rates will increase. The empirical results show that from 1996 to 2007, interna-tional divisions and specializations with efficiency improvements lead to increases in some countries' manufacture value added rates, such as the US, Japan, India and European Union. But for China, the manufacture value added rate actually decreases under interna-tional specialization. The main factor causing the decreases of value added rates in the US and Japan is price changes, and the main fac-tors for the decreases of value added rates in EU and Canada are non price factors except for international division of labor and price changes.

Key words: value added rate, division of labor, technology, input-output technique