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Clustering as a Way to Lower Capital Barriers: The Case of the Cashmere Sweater Cluster in Zhejiang

Author

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  • Ruan, Jianqing
  • Wei, Longbao
  • Zhang, Xiaobo

Abstract

Understanding how small enterprises overcome capital barriers is the key to understanding China's rapid development. The literature traditionally emphasizes the development of financial market to raise small amount of loan. By studying the division of labor in the cashmere sweater cluster in Puyuan and the cash flow in the course of daily operation, this paper, argues instead that industry clusters lower capital entry access through the division of labor; various entities in the cluster obtain the capital required for daily operation by taking advantage of individual social capital and endogenous capital in the cluster.

Suggested Citation

  • Ruan, Jianqing & Wei, Longbao & Zhang, Xiaobo, 2006. "Clustering as a Way to Lower Capital Barriers: The Case of the Cashmere Sweater Cluster in Zhejiang," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia 25280, International Association of Agricultural Economists.
    • Handle: RePEc:ags:iaae06:25280
    DOI: 10.22004/ag.econ.25280
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    References listed on IDEAS

    as
    1. Tetsushi Sonobe & Keijiro Otsuka, 2006. "The Division of Labor and the Formation of Industrial Clusters in Taiwan," Review of Development Economics, Wiley Blackwell, vol. 10(1), pages 71-86, February.
    2. 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.
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    4. 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.
    5. Felix Rioja & Neven Valev, 2004. "Finance and the Sources of Growth at Various Stages of Economic Development," Economic Inquiry, Western Economic Association International, vol. 42(1), pages 127-140, January.
    6. Meghana Ayyagari & Asli Demirgüç-Kunt & Vojislav Maksimovic, 2008. "How Important Are Financing Constraints? The Role of Finance in the Business Environment," The World Bank Economic Review, World Bank, vol. 22(3), pages 483-516, November.
    7. Young, Allyn A., 1928. "Increasing Returns and Economic Progress," History of Economic Thought Articles, McMaster University Archive for the History of Economic Thought, vol. 38, pages 527-542.
    8. repec:bla:jfinan:v:53:y:1998:i:6:p:2107-2137 is not listed on IDEAS
    9. Schmitz, Hubert & Nadvi, Khalid, 1999. "Clustering and Industrialization: Introduction," World Development, Elsevier, vol. 27(9), pages 1503-1514, September.
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    Cited by:

    1. 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.

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