The Evolution of an Industrial Cluster in China
AbstractWe use two rounds of surveys, in 2000 and 2008, in the Zhili Township children’s garment cluster in Zhejiang Province to examine in depth its evolution. Firm size has grown on average in terms of output and employment, and increasing divergence in firm sizes has been associated with a significant increase in specialization and outsourcing among firms in the cluster. Although initial investments have more than tripled, they remain low enough so that formal bank loans remain an insignificant source of finance. Accompanying lower entry barriers, there have been an increasing number of firms in the cluster, which have driven down profit and bid up wages, particularly since the year 2000. Facing severe competition, more firms have begun to upgrade their product quality. By the year 2007, nearly half of the sampled had established registered trademarks and nearly 20 percent had become ISO certified. Declining profit ratios to initial investment and stagnant TFP imply that the future of this industry is likely to rest on using more advanced technology and higher ratios of capital to labor, which imply increases in firm size and initial investment. Thus traditional sources of finance that do not require honest, efficient, and transparent courts are likely to fade as the need for improved legal and financial institutions become critical factor influencing China’s growth prospects.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Ohio State University, Department of Economics in its series Working Papers with number 09-05.
Length: 19 pages
Date of creation: May 2009
Date of revision:
Contact details of provider:
Postal: 410 Arps Hall 1945 North High Street Columbus, Ohio 43210-1172
Other versions of this item:
- L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
- O14 - Economic Development, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
- P23 - Economic Systems - - Socialist Systems and Transition Economies - - - Factor and Product Markets; Industry Studies; Population
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-06-03 (All new papers)
- NEP-BEC-2009-06-03 (Business Economics)
- NEP-CNA-2009-06-03 (China)
- NEP-DEV-2009-06-03 (Development)
- NEP-TRA-2009-06-03 (Transition Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- George J. Stigler, 1951. "The Division of Labor is Limited by the Extent of the Market," Journal of Political Economy, University of Chicago Press, vol. 59, pages 185.
- 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.
- Ruan, Jianqing & Zhang, Xiaobo, 2008. "Finance and cluster-based industrial development in China:," IFPRI discussion papers 768, International Food Policy Research Institute (IFPRI).
- Huang, Zuhui & Zhang, Xiaobo & Zhu, Yunwei, 2007.
"The role of clustering in rural industrialization: A Case Study of the Footwear Industry in Wenzhou,"
IFPRI discussion papers
705, International Food Policy Research Institute (IFPRI).
- Huang, Zuhui & Zhang, Xiaobo & Zhu, Yunwei, 2008. "The role of clustering in rural industrialization: A case study of the footwear industry in Wenzhou," China Economic Review, Elsevier, vol. 19(3), pages 409-420, September.
- Belton Fleisher & Haizheng Li & Min-Qiang Zhao, 2009.
"Human Capital, Economic Growth, and Regional Inequality in China,"
09-01, Ohio State University, Department of Economics.
- Fleisher, Belton & Li, Haizheng & Zhao, Min Qiang, 2010. "Human capital, economic growth, and regional inequality in China," Journal of Development Economics, Elsevier, vol. 92(2), pages 215-231, July.
- Belton Fleisher & Haizheng Li & Min Qiang Zhao, 2007. "Human Capital, Economic Growth, and Regional Inequality in China," William Davidson Institute Working Papers Series wp857, William Davidson Institute at the University of Michigan.
- Fleisher, Belton M. & Li, Haizheng & Zhao, Min Qiang, 2007. "Human Capital, Economic Growth, and Regional Inequality in China," IZA Discussion Papers 2703, Institute for the Study of Labor (IZA).
- Fleisher, Belton M. & Li, Haizheng & Zhao, Min Qiang, 2008. "Human Capital, Economic Growth, and Regional Inequality in China," IZA Discussion Papers 3576, Institute for the Study of Labor (IZA).
- Kong-Yam Tan, 2007.
"Incremental Reform and Distortions in China's Product and Factor Markets,"
World Bank Economic Review,
World Bank Group, vol. 21(2), pages 279-299, March.
- Zhang, Xiaobo & Tan, Kong-Yam, 2007. "Incremental Reform and Distortions in China’s Product and Factor Markets," MPRA Paper 6804, University Library of Munich, Germany.
- T. Sonobe & D. Hu & K. Otsuka, 2002. "Process of Cluster Formation in China: A Case Study of a Garment Town," Journal of Development Studies, Taylor & Francis Journals, vol. 39(1), pages 118-139.
- Schmitz, Hubert & Nadvi, Khalid, 1999. "Clustering and Industrialization: Introduction," World Development, Elsevier, vol. 27(9), pages 1503-1514, September.
- 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.
- Eiji Yamamura & Tetsushi Sonobe & Keijiro Otsuka, 2003. "Human capital, cluster formation, and international relocation: the case of the garment industry in Japan, 1968--98," Journal of Economic Geography, Oxford University Press, vol. 3(1), pages 37-56, January.
- Sonobe, Tetsushi & Higuchi, Yuki & Otsuka, Keijiro, 2012.
"Productivity growth and job creation in the development process of industrial clusters,"
Policy Research Working Paper Series
6280, The World Bank.
- Tetsushi Sonobe & Yuki Higuchi & Keijiro Otsuka, 2012. "Productivity Growth and Job Creation in the Development Process of Industrial Clusters," GRIPS Discussion Papers 11-22, National Graduate Institute for Policy Studies.
- Shahid Yusuf, 2012. "From Technological Catch-up to Innovation : The Future of China’s GDP Growth," World Bank Other Operational Studies 12781, The World Bank.
- Bellandi, Marco & Lombardi, Silvia, 2012. "Specialized markets and Chinese industrial clusters: The experience of Zhejiang Province," China Economic Review, Elsevier, vol. 23(3), pages 626-638.
- Lin, Hui-Lin & Li, Hsiao-Yun & Yang, Chih-Hai, 2011. "Agglomeration and productivity: Firm-level evidence from China's textile industry," China Economic Review, Elsevier, vol. 22(3), pages 313-329, September.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (John Slaughter).
If references are entirely missing, you can add them using this form.