Management & Engineering Empirical Studies on the Relationship Between Logistics

Management & Engineering 20 (2015) 1838-5745
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Management & Engineering
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Empirical Studies on the Relationship Between Logistics
Development and the Economic Growth of Tertiary Industry of
Hunan
Caihong XIE, Dingti LUO
Finance and Economics Department, Hunan University of Technology, Zhuzhou, Hunan, China
KEYWORDS
ABSTRACT
Logistics,
The tertiary industry,
Cointegration test,
Granger test
On the basis of theoretical analysis, using the data between 1984 to 2008 of Hunan province,
regarding the quantity of shipments (million tons) and the added value of Hunan’s tertiary
industry (million Yuan) as a research index, this paper verifies the cointegration and
the causality of the logistics industry and the added value of Hunan’s tertiary industry
through ADF test and Granger test by using the economic analysis software—Eviews. The
result shows that there exists long-term stability of the added value of Hunan’s tertiary
industry and logistics development. Hunan province's economic growth of the tertiary
industry promotes the logistics development, but the role of logistics development to the
economic growth is not so obvious. Several suggestions for logistics development are them
provided.
© ST. PLUM-BLOSSOM PRESS PTY LTD
1 Introduction
1.1 Research background
The "logistics" as "the third profit source" of the enterprise in the 21st century plays an indelible role in the national economic
development, so it is not only the basis and "artery" of the national economy, but also the "lubricant" and "propellant" of the regional
economic development, and even when impacted severely by 2008 financial crisis, China's logistics industry still maintained the
steady and rapid development. With the national development of logistics in recent years, the logistics industry in Hunan makes full
use of its special geographical position to make the rapid development, and the modern logistics has become the key industry and
new economic growth point in Hunan production services, and in 2008, the logistics freight volume in Hunan Province reached
1.07823 billion tons, increasing by 8.36% over last year. About the relationship between modern logistics and economic growth,
there are two opposite views in the academic community: the logistics promotion view and economic drive view. In the logistics
promotion view, the modern logistics develops as the promotion of its supply ability, and the promotion of supply ability gives an
impetus to the economic growth. However, in the economic drive view, the economic growth generates the demands on the modern

Corresponding author.
E-mail address: [email protected]
English edition copyright © ST. PLUM-BLOSSOM PRESS PTY LTD
DOI:10.5503/J.ME.2015.20.015
75
logistics, and then, the modern logistics is driven to develop, and the improved economic ensure the smooth development of modern
logistics.
1.2 Literature review
Overseas logistics research starts earlier, but most are concentrated in the microscopic enterprise level, that is, to provide the overall
optimization strategy for enterprises. Through the literature review, it is found in the overseas researches that the there are not many
macroscopic researches on the relation between the logistics and economic growth. Such as the perspective of Closs etc. (2005) from
the view of logistics capabilities, the enterprise should reasonably arrange the logistics system, and improve the logistics response
and distribution capacities and the assets productivity to meet changing needs, resources and international market competition and the
personalized customer demand, and the higher customer expectations. Such as Leonard (2003) and Akonmbe (2005) from the view
of regional logistics development, during the regional economic integration, the government should make the guide and promote, but
also the function of production factors allocation depending on the market mechanisms should be strengthened to promote the
integration of regional industry and market, and to nurture and develop the common market. Mirjam etc. (2001) get Trinidad Island,
Tobago Island, and Singapore economic zone etc. as the study objects, and make the empirical research on the relation between the
regional logistics industry and regional develop, and aim to provide theoretical guidance for the construction of the Dutch economy.
In recent years, some academics do some quantitative research of the relationship of the logistics and economic growth by the
measurement of economic analysis software. Some from the angle of the whole country's economic, Li Wenxun (2004) studied the
relationship of logistics and GDP and concluded that there exiisted reliable cointegration and one-way causality between them.
Considering the energy price index, Li Li (2006) found that the turnover of freight traffic and GDP existing one-way causality. Qian
Xiaoying (2007) found that there existed one-way causality between fixed assets investment and the logistics. Bu Xiangzhi (2009)
studied logistics development and economic growth by using cointegretion and Granger causality tests, and found that there exists
highly positive correlation and long-term cointegretion between the gross domestic product and cargo transport, freight volume and
the output of transportation, storage and communications sectors, respectively. Some authors learned the relationship from the
background of certain region or area. Building a turnover of freight traffic and GDP growth model, Cheng Shiping (2006), Ruan
Luning (2006), Peng Rengui (2007) and Li Zhengfeng (2009) analyzed the contribution rate of logistics for economic growth as the
special region of Anhui province, Jiangxi province, the Yangtze river delta and Lianyun port, respectively. Ping Xianbing (2008)
studied the influence of logistics to Hunan’s GDP growth but he used the Logistic model.
Seen from the above literature, there are many scholars studying the cointegration and the causality of the logistics industry and
economic growth, but not involved in the logistics and economic growth of Hunan province, particularly with the tertiary industry of
economic growth. Using the data from 1984 to 2008 of Hunan province of Statistical Yearbook of Hunan, regarding the freight
volume (million tons) and the added value of Hunan’s tertiary industry (million Yuan) as research indexes, this paper verifies the
Cointegration and the causality of the logistics industry and the added value of Hunan’s tertiary industry through ADF test and
Granger test by using the economic analysis software—Eviews, that is, testing whether there is long-term equilibrium of the
economic growth of Hunan’s tertiary industry and logistics development and testing whether the Hunan’s logistics industry pushes
the development of tertiary industry or otherwise or there is complementary relationship between them. Through the testing results,
this paper is purpose to providing several suggestions for Hunan’s logistics development.
2 Empirical Analysis on the Interactive Relationship of Hunan’s Logistics
Development and the Tertiary Industry’s Economic Development
2.1 Variable constructing and data processing
Using the data from 1984 to 2008 of Hunan province of Statistical Yearbook of Hunan as a sample section, which is a reliable
source, considering the issue of variable’s colinearity, this paper only selects the indicator of freight volume (million tons) reflecting
the logistics development and the added value of Hunan’s tertiary industry (million Yuan) as an object. To eliminate the
heteroskedasticity, this paper uses the logarithm of original data. The processed data are as per Table 1 below:
Table 1 The processed data of the added value of Hunan’s tertiary industry and freight volume between 1984-2008
Year
1984
1985
1986
1987
1988
1989
1990
Log(TGDP)/ Millin Yuan
1.737749074
1.875928985
1.949828959
2.040997692
2.16363836
2.226187323
2.333185208
76
Log(hyl)/ million Ton
4.50242712
4.517222298
4.542850314
4.5532396
4.591287265
4.577974081
4.576433498
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2.398512899
2.51308436
2.592154542
2.72214836
2.830049475
2.917027365
2.978513759
3.03106089
3.094575934
3.168317718
3.199829198
3.244635791
3.300112666
3.360706989
3.421682882
3.489249537
3.563129711
3.624917084
4.615097451
4.628879151
4.663455918
4.685275853
4.697969977
4.702895603
4.690018781
4.691497013
4.709125738
4.709507401
4.724562573
4.717304277
4.777803676
4.843108142
4.885790778
4.929408707
4.997827445
5.032711411
TGDP and hyl represents the added value of Hunan’s tertiary industry and freight volume, respectively.
2.2 Cointegration test
Cointegration test can be understood that two variables have a long-term stable relationship. Since this paper uses the data of time
sequence, it is required to test the variable’s stationary. We obtain the test result of ADF by the use of software — Eviews, shown as
Table 2.
Table 2 The result of variable’s ADF test statistic
Variable
ADF Test Value
Testing Form
Log(TGDP)
-1.295
(C, T, 0)
Log(hyl)
0.402
(C, T, 0)
DLog(TGDP)
-1.679
(C, 0, 1)
DLog(hyl)
-3.028
(C, 0, 1)
DDLog(TGDP)
-10.264
(0, 0, 2)
DDLog(hyl)
-7.208
(0, 0, 2)
Critical Value
-4.394(1%),
-3.612(5%),
-3.243(10%)
-4.394(1%),
-3.612(5%),
-3.243(10%)
-3.770(1%),
-3.005(5%),
-2.642(10%)
-3.753(1%),
-2.998(5%),
-2.639(10%)
-2.674(1%),
-1.957(5%),
-1.608(10%)
-2.674(1%),
-1.957(5%),
-1.608(10%)
Conclusion
non-stationary
non-stationary
non-stationary
non-stationary
non-stationary
non-stationary
non-stationary
non-stationary
non-stationary
non-stationary
non-stationary
non-stationary
stationary
stationary
stationary
stationary
stationary
stationary
Notice: (1) Test form (C, T, k), C represents intercept, 0 represents no intercept; T represents trend, 0 represents no trend; k represents lag intervarls.
(2) D and DD represents first-order difference and second-order difference to variable, respectively.
Comparing ADF test statistic of each sequence with the critical value, the original sequence of log (tgdp) and log (hyl) and first-order
differenc sequence dlogtgdp dlog (hyl) are non-stationary under the cases of the significant level of 1%, 5% and 10%. However, the
second-order difference sequence is stationary. We can get the conclusion that log (tgdp) and log (hyl) are the second-order
cointegration sequence which satisfied with the premise.
Deal log (tgdp) and log (hyl) with OLS estimation, we can get a sequence of residual, named et. The result of Do ADF testing with
the sequence of residual, is shown in the following Table 3. From the data in Table 3, all of the absolute value of ADF value is
greater than the critical value of each significant level. There is no unit root and the sequence is stable, that is, there exists long-term
stability of the added value of Hunan’s tertiary industry and logistics development. It is still uncertain whether such a long-term
equilibrium is causal. Next we use Granger causality tests to analyze the relationship.
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Table 3 Residual’s ADF testing result
Variable
ADF Testing
Testing Form
1% Critical Value
5% Critical Value
10% Critical Value
Conclusion
et
-8.637
(0, 0, 2)
-2.674
-1.957
-1.608
stationary
2.3 Granger causality test
The purpose of causality test is testing whether the economic variables exists the relationship of one-way or two-way. In this paper,
the inspection is whether the economic growth of Hunan’s tertiary industry pulls logistics development or logistics development
urges the economic growth of Hunan’s tertiary industry. The testing approache is: using the current explained variable regress the
explained variable and explaining variable with some lag intervals which tests whether explaining variable with some lag intervals as
a whole improved the regression result. If yes, the explaining variable can granger cause the explained variable, or otherwise.
Cointegration test show there exists long-term stability of the added value of Hunan’s tertiary industry and logistics development.
However, whether there is a causality relationship needs further verification. When conducting granger causality test, the testing
results is sensitive to the lag intervals and is limited by the sample capacity. This paper selects three different lag intervals and use the
Granger causality test function of Eviews to test the existence granger causality between two variables. The testing results show in
Table 4.
Table 4 Granger causality test
Lag intervals
1
2
3
Null Hypothesis
Obs
LOGHYL cannot granger cause LOGTGDP
LOGTGDP cannot granger cause LOGHYL
LOGHYL cannot granger cause LOGTGDP
LOGTGDP cannot granger cause LOGHYL
LOGHYL cannot granger cause LOGTGDP
LOGTGDP cannot granger cause LOGHYL
24
23
22
F-statistic
Prob.
3.31959
0.30548
1.66258
0.00276
1.03708
3.45653
0.0827
0.5863
0.2175
0.9972
0.4045
0.0435
Table 4 shows that the inspection results under 1, 2 lagged period is not the granger cause for each other, but under the significant
level of 5% (F- statistic critical value is 2.82) of 3 lag intervals, deny "logtgdp cannot granger cause loghyl", but accept "loghyl
cannot granger cause logtgdp," that is, the economic growth of Hunan’s tertiary industry can granger cause logistics development,
but logistics development cannot granger cause the economic growth of Hunan’s tertiary industry and the acceleration of third
industrial to logistics exist two years lag intervals.
3 Conclusion
By the above cointegration test and causality tests, we can find that there exists long-term stability of the added value of Hunan’s
tertiary industry and logistics development in recent years, and Hunan province's economic growth of the tertiary industry promotes
the logistics development, but the role of logistics development to the economic growth is not so obvious. For Hunan, the logistics
industry has a big space for development and all departments should pay more attention to the logistics’ further development. Several
suggestions provided are as follows:
Firstly, the government should increase the investment to strengthen the construction of logistics infrastructure platform, logistics
information platform and logistics management platform, and then to enhance the efficiency of logistics operations in Hunan.
Relying on the logistics industrial parks, the railway, highway, waterway and other transport channels construction should be
strengthened; public logistics information systems and information system dedicated for logistics enterprises should be built up to
provide facilities for the earlier realization of information; the standard system for the logistics industry, logistics policy regulations
and market access system should be perfected.
Secondly, enterprises should look for a suitable logistics model for its development, for example, the large powerful enterprises
should choose the self-distribution model, but, for most small businesses, the logistics outsourcing is the best choice for enhancing
the core competitiveness, and also they can make full use of third-party logistics market to adopt a common distribution model.
Thirdly, about colleges and universities, in recent years, many universities and vocational institutions in Hunan open the logistics
major, but from the view of the current training methods, these majors focus mainly on the theoretical train, but the theoretical
development falls far behind the actual demands, so our colleges and universities should not only guide our students, but also should
train their practice capacities.
78
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