A Research on Industrial Correlation of Logistics Industry

A Research on Industrial Correlation of Logistics Industry
LIU Shuang, CHEN Zhiya
School of Traffic and Transportation Engineering, Central South University, P.R.China, 410075
[email protected]
Abstract: Based on the 2005 input-output tables of Zhejiang province of China, this paper studies the
directly related industries and completely related industries of logistics industry of Zhejiang province of
China by calculating the direct consumption coefficient, complete consumption coefficient, direct
distribution coefficient and complete distribution coefficient. It divides the related industries of logistics
into three types and illustrates the intermediate investment structure and service direction. The results of
the analysis shows that the logistics industry of Zhejiang province has wide effects to other industries.
So we ought to choose positive industry policy to accelerate the development of logistics industry.
Keywords: Logistics industry, industrial correlation, input-output
1 Introduction
Logistics industry is the arterial and basic industry of national economic development, and an
accelerator of economic development. Its development level is one of the important symbols to measure
the degree of modernization and comprehensive national strength of a country.(Ruan & Zheng. 2005.
P.27.). As a economic province, Zhejiang province’ tertiary industry is well developed, and the logistics
industry is also very rapidly developing. In the outline of the Tenth Five-Year Plan, Zhejiang province
proposed the modern logistics as the development focus of the service industry, encouraging the goods,
warehousing enterprises and the wholesale markets to develop logistics and distribution, promoting the
combination of traditional commerce industry and transportation warehousing industry, cultivating
large-scale logistics enterprise groups, and accelerating the development of the logistics industry. At
present, there are more than 3600 logistics enterprises in Zhejiang province. In 2007, the total amount of
social logistics was RMB4860 billion, the value-added of logistics was RMB177 billion, it accounted
for 9.5 percent of GDP of Zhejiang province. (Gu. 2008. B.3.).
At the present time, there is seldom research on industrial correlation and industry spread of logistics
industry. (Song & Chang, 2008, P.3), (Li & Xiong, 2005, P.27), (Zhu, 2008, P.127), (Ruan & Zheng,
2006, P.27) respectively calculated the input-output indexes and coefficients of Chinese logistics
industry, logistics industry of Guangdong Province, logistics industry of the Central Plains region, and
logistics industry of Fujian Province, and analyzed industry spread effect of logistics industry. But in
their analysis on industry spread effect of modern logistics industry, they divided all departments into
four industrials, that is, combining all 42 departments in the input-output table (or 122 departments) into
primary industry, secondary industry, tertiary industry, and logistics industry, then got the association
relation between logistics industry and the other three. This paper combined the three departments in the
input and output table of Zhejiang province of year 2005, transportation, storage and the post and
telecommunications into one industrial, logistics, deeply researched on the relationship between
logistics industry and other forty-one, found out main industry types which have closer correlation with
logistics industry, quantitatively reflected the impact of logistics industry to other related industries and
revealed internal structure relation among logistics industry and other industries.
2 Correlative industry research methods of logistics industry
The essence of industrial correlation, is the technical economy relation of various industries in the
process of economic activities, is the direct and indirect interdependence and mutual constraints among
different industry departments in social reproduction process. It reflects the objectively existing
relationship that different industries consume products from and provide products to each other, that is
also an input-output relationship between industrial departments. By the different directions, this
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industrial correlation can be divided into three types, forward correlation, backward correlation and
ring-direction correlation (Zheng, 2004, P.209). The correlation degree is a quantized relationship, that
is a degree of the impact of the change of a industry’s input-output to another industry’s input-output. In
general, direct consumption index, cumulative consumption index, direct distribute index and
cumulative distribute index are used to measure this correlation degree.
In the research of correlative industry of logistics, when an industry has a correlation degree higher than
average level plus a standard deviation, it is defined as an intimate correlation industry; a relatively
intimate correlation industry is defined as an industry whose correlation degree is higher than average
level; a correlative industry is defined as an industry whose correlation degree is lower than average
level and isn ' t equal to zero; no correlation industry is defined as a industry whose correlation degree is
equal to zero. We will analyze the correlative industries of logistics industry based on this definition
(Song, 2007, P.7).
3 Analysis on logistics industry and it’s backward correlative industry
Hirschman defined backward correlation relationship in The Strategy of Economic Development. An
industry has a certain relationship with others through its own demand, this relationship is a kind of
impact that an industry apply to others who provide products or service to him. From the view of input,
production process of logistics industry needs various input factors from other industrial departments,
the more this intermediate input is, the higher the correlation degree between logistics industry and
others is, the more obvious the demand influence to these industries is. The correlation effect between
logistics industry and its backward correlative industry can be analyzed in two aspects, directly related
and completely related.
3.1 Analysis on logistics industry and it’s directly backward correlative industry
Directly backward correlation degree can be measured by direct consumption index. Direct consumption
index measures direct consumption relationship between a certain industry department and others, it is
a
also called as input coefficient, denoted by ij ( i, j = 1, 2, L , n ), it refers to the value of products
and service of industry department i directly consumed by a unit of total output of industry department j.
The calculating formula can be described as
aij = xij / X j
( i, j = 1, 2, L , n )
Xj
(1)
xij
is the total input of industry department j ,
is the value of the products and services
Where,
i
of industry department .
The higher the direct consumption index, the larger the backward directly correlative between one
industry and another, the larger the demand effect from one industry’s development to another industry.
We can define the directly backward correlative industries of logistics by analyzing the column structure
of direct consumption index matrix of the input-output table (Zheng,2004,P.212).
Table 1 Main directly backward correlative industries of logistics industry
Direct consumption
Types of correlative
Directly backward correlative industries
index
petroleum processing, coking & nuclear fuel processing
0.1792
intimate
industry
logistics industry
0.0727
intimate
transportation equipments manufacturing industry
0.0707
intimate
The results of direct consumption index indicate three among 41 industrial sectors keep intimate direct
backward correlation with logistics industry(see Table1), five industrial sectors keep relatively intimate
direct backward correlation with logistics industry, 31 industrial sectors keep direct backward
correlation with logistics industry, and two industrial sectors have no direct backward correlation with
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logistics industry. To produce every RMB10000, of products and services, logistics industry needs
RMB1792 of direct input of petroleum processing, coking and nuclear fuel processing industry,
RMB727 input of logistics industry, RMB707 input of transportation equipments manufacturing
industry. This shows that development of logistics industry needs more direct input of petroleum
processing, coking and nuclear fuel processing industry, logistics industry, and transportation
equipments manufacturing industry, also needs necessity from financial and insurance industry, leasing
& business services industry, other social service industry, electric power thermal power production &
supply industry, and agriculture. Logistics industry generates strong, direct pulling function on these
industries.
3.2 Analysis on logistics industry and its complete backward correlative industry
Researched from the angle of whole society, one product not only directly consumes another product,
but also indirectly consumes it, the total of both direct and indirectly consumption is called as complete
consumption. Completely backward correlation degree of industry can be measured by complete
consumption index. In economic, the complete consumption index is sum of the direct and indirect
consumption to make a unit of product in a certain industry. It is denoted by
calculating formula can be described as
bij
generally. The
k
bij = aij + ∑ bik akj
k =1
( i, j = 1, 2, L , n )
(2)
k
∑b a
ik
kj
Where, bij is the complete consumption index, aij is the direct consumption index, k =1
is the
indirect consumption index. If we define I as identity matrix, A as the direct consumption index matrix,
formula of complete consumption index matrix B can be described as
B = ( I − A) −1 − I
(3)
The higher the complete consumption index, the larger the complete backward correlative among
industries, the larger the demand pulling function from one industry’s development to another industry.
We can also define complete backward correlative industries of logistics industry by analyzing the
column structure of complete consumption index matrix of the input-output table(Zheng, 2004, P.212).
Table 2 Main complete backward correlative industries of logistics industry
Complete consumption
Types of correlative
Complete backward correlative industries
index
petroleum processing, coking & nuclear fuel processing
0.2336
intimate
industry
petroleum & natural gas mining industry
0.1904
intimate
chemical industry
0.1075
intimate
transportation equipments manufacturing industry
0.1071
intimate
logistics industry
0.1015
intimate
The results of complete consumption index indicate 5 among 41industrial sectors keep intimate
complete backward correlation with logistics industry(see Table2), 5 industrial sectors keep
comparatively intimate complete backward correlation with logistics industry, 30 industrial sectors keep
complete backward correlation with logistics industry, and 1 industrial sector has no completet
backward correlation with logistics industry. To produce every RMB10000’s final products and services,
logistics industry needs RMB2336 of complete input (sum of direct and indirect input) of petroleum
processing, coking & nuclear fuel processing industry, RMB1904 input of petroleum
processingpetroleum & natural gas mining industry, RMB1075 input of chemical industry, RMB1071
input of transportation equipments manufacturing industry, RMB 1015 input of logistics industry. The
results show that the development of logistics industry needs more much input from these industries,
900
this input includes not only direct consumption but also indirect consumption of different sectors. The
development of logistics industry makes strong pull function on petroleum processing & coking and
nuclear fuel processing industry, petroleum and natural gas mining industry, chemical industry,
transportation equipments manufacturing industry, and logistics industry. In the meantime, it also has
complete backward correlation with metal smelting and calendering processing industry, electric &
thermal power production and supply industry, leasing & business services industry, financial and
insurance industry, and agriculture.
4 Analysis on logistics industry and it’s forward correlative industry
Hirschman defined forward correlation relationship in The Strategy Of Economic Development too, it is
a relationship that one industry department provide its products or service to other industry department.
That is the degree of production technology contact between one industry and other industry which need
products and services come from it. Forward assoication of an industry can be divided into direct
forward correlation and completely forward correlation.
4.1 Analysis on logistics industry and it’s directly forward correlative industry
The degree of directly forward correlation can be measure by direct allocation coefficient. Direct
allocation coefficient is an index that analyze directly technical and economic contact among industries
from the angle of output, it’s a ratio that the value of the products of a certain industry allocated to
another industry’s product as the intermediate products and directly consumed occupies the total value
of this product. The calculating formula can be described as(Zheng, 2004, P.215)
hij =
X ij
Xi
(
i, j = 1, 2,L , n )
(4)
hij
Where,
is the direct allocation coefficient.
The higher the direct allocation index of logistics industry, the more other industries directly demand
from logistics industry, the larger the push function of direct supply of logistics industry.
Table 3 Main directly forward correlative industries of logistics industry
Direct allocation
Types of correlative
Directly forward correlative industries
coefficient
chemical industry
0.0974
intimate
construction industry
0.0922
intimate
logistics industry
0.0727
intimate
general special equipments manufacturing
0.0596
intimate
industry
garment leather and natural down products
0.0526
intimate
industry
textile industry
0.0490
intimate
The results of direct allocation coefficient indicate 6 among 41 industrial sectors keep intimate direct
forward correlation with logistics industry (see Table3), 11 industrial sectors keep comparatively
intimate direct forward correlation with logistics industry, 22 industrial sectors keep direct forward
correlation with logistics industry, and 2 industrial sector has no direct forward correlation with logistics
industry. In every RMB10000’s products and services of logistic, there are RMB974, as intermediate
product, output to chemical industry, RMB922 to construction industry, RMB727 to logistics industry,
RMB595 to general special equipments manufacturing industry, RMB526 to garment leather and natural
down products industry, RMB490 to textile industry. The development of these industries need products
and services as production input from logistics industry, logistics industry generates strong direct push
function on these industries.
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4.2 Analysis on logistics industry and it’s complete forward correlative industry
The degree of completely forward correlation can be measure by complete allocation coefficient.
Complete allocation coefficient is an index that analyzes the directly and indirectly technical and
economic relationship among industries from the angle of output. The economic meaning of completely
allocation coefficient is the amount of every output of one industry department that is assigned to
another industry department through direct and indirect demand. Complete allocation coefficient
(expressed by wij) is the amount of every total output of department i that is directly and all
j (Including first indirect distribution, second indirect distribution,
third indirect distribution, and so on). It reflects the degree of whole contribution of department i to
j
department , including direct contribution and indirect contribution. It is equal to the sum of the direct
allocation index and whole indirect allocation index from department i to department j . If I is an
indirectly-distributed to department
identity matrix, H is an allocation index matrix, the computation formula of complete allocation index
matrix can be described as
W = ( I − H ) −1 − I
(5)
The higher the complete allocation index of logistics industry, the larger the push function from logistics
industry to other industries, the larger the complete forward correlation among industries(Zheng, 2004,
P.217).
Table 4 Main completely forward correlative industries of logistics industry
Complete allocation
Types of correlative
Complete forward correlative industries
coefficient
chemical industry
0.3398
intimate
construction industry
0.3025
intimate
textile industry
0.2188
intimate
general special equipments manufacturing
0.2105
intimate
industry
garment leather and natural down products
0.2053
intimate
industry
electric machinery & equipment manufacturing
0.1611
intimate
industry
The results of complete allocation coefficient indicate, 6 among 41 industrial sectors have intimate
complete forward correlation with logistics industry, such as chemical industry, construction industry,
textile industry, general special equipments manufacturing industry, garment leather and natural down
product industry, and electric machinery & equipment manufacturing industry(see Table4);11 industrial
sectors have relatively intimate complete forward correlation with logistics industry, such as metal
smelting & calendering processing industry, non-mental mineral product industry, transportation
equipments manufacturing industry, metal product industry, logistics industry, electric power thermal
power production & supply industry, printing paper & cultural & educational supplies manufacturing
industry, communication equipment computer& other electronic equipment manufacturing industry,
food manufacturing& tobacco processing industry, wholesale & retail trade industry, leasing & business
services industry and so on; 22 industrial sectors have complete forward correlation with logistics
industry, and 2 industrial sector has no complete forward correlation with logistics industry. The
products and services from logistics industry were inputed directly and indirectly to these industries, and
push the development of these industries, this push function comes from the direct demand and the
indirect demand in industrial networks .
5 Conclusion
The research on the forward and backward correlative industry of logistics based on the 2005
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input-output tables of Zhejiang province of China shows that logistics industry spreads very widely.
Among 41 departments, all industries have direct or complete backward correlation with logistics
industry, the complete correlation is more significant than others. Logistics’ forward correlation is
higher than its backward correlation, which shows that logistics industry, to a great extent, acts as
intermediate product to meet the production requirements of other industries. There are some industries
which have ring-direction correlative relationships with logistics, they provide products and services to
logistics and at the same time they also consume products and services from logistics industry, the most
typical ones among them are the transportation equipments manufacturing industry, metal smelting &
calendering processing industry, electric and thermal power production & supply industry, they
simultaneously have strong forward and backward correlation with logistics industry. The indirect
correlation between logistics industry and other industrial department is indispensable, the existence of
indirect effects strengthened logistics’ driving effect on the development of other industries. Logistics
industry and its direct and indirect correlative industries constitute a logistics industrial network. The
analysis above fully proves the wide spread of logistics industry of Zhejiang province, it is a very
correct decision to choose positive industrial policies to accelerate the development of logistics industry.
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