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

  • Brandt, Loren
  • Thun, Eric

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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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
Contact details of provider: Web page: http://www.elsevier.com/locate/worlddev

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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. 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, June.
  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. 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.
  6. Crespo, Nuno & Fontoura, Maria Paula, 2007. "Determinant Factors of FDI Spillovers - What Do We Really Know?," World Development, Elsevier, vol. 35(3), pages 410-425, March.
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