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

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  • Loren Brandt
  • Eric Thun

Abstract

When China acceded to 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 favour 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

Paper provided by University of Toronto, Department of Economics in its series Working Papers with number tecipa-395.

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Length: 69 pages
Date of creation: 16 Mar 2010
Date of revision:
Handle: RePEc:tor:tecipa:tecipa-395

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Keywords: China; industrialization; FDI; upgrading; value-chains; emerging markets; automotive;

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References

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  1. 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.
  2. 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.
  3. Hubert Schmitz, 2007. "Reducing Complexity in the Industrial Policy Debate," Development Policy Review, Overseas Development Institute, vol. 25(4), pages 417-428, 07.
  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. 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.
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Cited by:
  1. 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.
  2. 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.
  3. Nahm, Jonas & Steinfeld, Edward S., 2014. "Scale-up Nation: China’s Specialization in Innovative Manufacturing," World Development, Elsevier, vol. 54(C), pages 288-300.
  4. 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.

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