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“Made in China”: Crisis begets quality upgrade

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  • Ruan, Jianqing
  • Zhang, Xiaobo

Abstract

The quality of manufactured products made in China has improved tremendously in the past several decades. In this paper, we argue that crises are instruments for the upgrade of Chinese manufactured goods. We first develop a theoretical framework to show that a crisis, if used wisely, could present good opportunities for entrepreneurs and local governments to form collective action to improve product quality. Next, we empirically test the hypothesis using a panel data set from 1990 to 2008 covering more than 100 clusters in the Zhejiang Province of China.

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Bibliographic Info

Paper provided by International Food Policy Research Institute (IFPRI) in its series IFPRI discussion papers with number 1025.

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Date of creation: 2010
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Handle: RePEc:fpr:ifprid:1025

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Keywords: Cluster; crisis; manufacturing industry; quality upgrade;

References

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  1. Keijiro Otsuka, 2006. "Cluster-Based Industrial Development: A View From East Asia," The Japanese Economic Review, Japanese Economic Association, vol. 57(3), pages 361-376.
  2. Eric Maskin & Yingyi Qian & Chenggang Xu, 1999. "Incentives, Information, and Organizational Form," Working Papers 99009, Stanford University, Department of Economics.
  3. Drazen, A. & Grilli, V., 1991. "The Benefits of Crisis for Economic Reforms," Papers 27-91, Tel Aviv.
  4. Shapiro, Carl, 1983. "Premiums for High Quality Products as Returns to Reputations," The Quarterly Journal of Economics, MIT Press, vol. 98(4), pages 659-79, November.
  5. Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth through Creative Destruction," Econometrica, Econometric Society, vol. 60(2), pages 323-51, March.
  6. Jianqing Ruan & Xiaobo Zhang, 2009. "Finance and Cluster-Based Industrial Development in China," Economic Development and Cultural Change, University of Chicago Press, vol. 58(1), pages 143-164, October.
  7. Klein, Benjamin & Leffler, Keith B, 1981. "The Role of Market Forces in Assuring Contractual Performance," Journal of Political Economy, University of Chicago Press, vol. 89(4), pages 615-41, August.
  8. Cheung Kui-yin & Lin, Ping, 2004. "Spillover effects of FDI on innovation in China: Evidence from the provincial data," China Economic Review, Elsevier, vol. 15(1), pages 25-44.
  9. Gene M. Grossman & Elhanan Helpman, 1989. "Quality Ladders in the Theory of Growth," NBER Working Papers 3099, National Bureau of Economic Research, Inc.
  10. Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth Through Creative Destruction," Scholarly Articles 12490578, Harvard University Department of Economics.
  11. Khalid Nadvi, 1999. "The cutting Edge: Collective efficiency and international competitiveness in Pakistan," Oxford Development Studies, Taylor & Francis Journals, vol. 27(1), pages 81-107.
  12. Long, Cheryl & Zhang, Xiaobo, 2011. "Cluster-based industrialization in China: Financing and performance," Journal of International Economics, Elsevier, vol. 84(1), pages 112-123, May.
  13. Cozzi, Guido, 2007. "Self-fulfilling prophecies in the quality ladders economy," Journal of Development Economics, Elsevier, vol. 84(1), pages 445-464, September.
  14. Roberto Álvarez & Sebastián Claro, 2006. "The China Phenomenon: Price, Quality or Variety?," Working Papers Central Bank of Chile 411, Central Bank of Chile.
  15. Steven Berry & Joel Waldfogel, 2003. "Product Quality and Market Size," NBER Working Papers 9675, National Bureau of Economic Research, Inc.
  16. Feenstra, Robert C, 1988. "Quality Change under Trade Restraints in Japanese Autos," The Quarterly Journal of Economics, MIT Press, vol. 103(1), pages 131-46, February.
  17. Xu, Bin, 2000. "Multinational enterprises, technology diffusion, and host country productivity growth," Journal of Development Economics, Elsevier, vol. 62(2), pages 477-493, August.
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Cited by:
  1. Zhang, Xiaobo & Hu, Dinghuan, 2011. "Overcoming successive bottlenecks: The evolution of a potato cluster in China," IFPRI discussion papers 1112, International Food Policy Research Institute (IFPRI).

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