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The Fight for the Middle: Upgrading, Competition, and Industrial Development in China

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  • Brandt, Loren
  • Thun, Eric

Abstract

Summary When China acceded to World Trade Organization (WTO) in 2001, there were fears that Chinese firms would lose market share in key sectors to foreign-invested enterprises (FIEs). Although aggregate data often indicate a shift in favor of FIEs, indigenous firms in many cases have slowly increased market share and deepened their technical capabilities. Through an analysis of aggregate data and three sectors, we show how the dynamics of competition between Chinese and FIEs in China's domestic market enhance the upgrading prospects for Chinese firms. China represents a new model of development in several important respects: industrial upgrading efforts are often domestically driven, within this domestic market there is intense competition between both domestic and foreign firms, and this competition is driving and stimulating the upgrading efforts of domestic firms.

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Bibliographic Info

Article provided by Elsevier in its journal World Development.

Volume (Year): 38 (2010)
Issue (Month): 11 (November)
Pages: 1555-1574

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Handle: RePEc:eee:wdevel:v:38:y:2010:i:11:p:1555-1574

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Web page: http://www.elsevier.com/locate/worlddev

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Keywords: China industrialization FDI upgrading emerging markets automotive;

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References

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  1. John Humphrey & Hubert Schmitz, 2002. "How does insertion in global value chains affect upgrading in industrial clusters?," Regional Studies, Taylor & Francis Journals, vol. 36(9), pages 1017-1027.
  2. Hubert Schmitz, 2007. "Reducing Complexity in the Industrial Policy Debate," Development Policy Review, Overseas Development Institute, vol. 25(4), pages 417-428, 07.
  3. Nuno Crespo & Maria Paula Fontoura, 2005. "Determinant Factors of FDI Spillovers – What Do We Really Know?," Working Papers Department of Economics 2005/06, ISEG - School of Economics and Management, Department of Economics, University of Lisbon.
  4. Steinfeld, Edward S., 2004. "China's Shallow Integration: Networked Production and the New Challenges for Late Industrialization," World Development, Elsevier, vol. 32(11), pages 1971-1987, November.
  5. Alice H. Amsden & Wan-wen Chu, 2003. "Beyond Late Development: Taiwan's Upgrading Policies," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262011980, December.
  6. Gereffi, Gary, 1999. "International trade and industrial upgrading in the apparel commodity chain," Journal of International Economics, Elsevier, vol. 48(1), pages 37-70, June.
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Cited by:
  1. Liu, Xiaohui & Hodgkinson, Ian R. & Chuang, Fu-Mei, 2014. "Foreign competition, domestic knowledge base and innovation activities: Evidence from Chinese high-tech industries," Research Policy, Elsevier, vol. 43(2), pages 414-422.
  2. Francesca Checchinato & Lala Hu & Alessandra Perri & Tiziano Vescovi, 2013. "Internationalization of a Chinese "born glocal" brand: the case of Goodbaby," Working Papers 25, Department of Management, Università Ca' Foscari Venezia.
  3. He, Xiyou & Mu, Qing, 2012. "How Chinese firms learn technology from transnational corporations: A comparison of the telecommunication and automobile industries," Journal of Asian Economics, Elsevier, vol. 23(3), pages 270-287.
  4. Nahm, Jonas & Steinfeld, Edward S., 2014. "Scale-up Nation: China’s Specialization in Innovative Manufacturing," World Development, Elsevier, vol. 54(C), pages 288-300.

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