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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.

Suggested Citation

  • Loren Brandt & Eric Thun, 2010. "The Fight for the Middle: Upgrading, Competition, and Industrial Development in China," Working Papers tecipa-395, University of Toronto, Department of Economics.
  • Handle: RePEc:tor:tecipa:tecipa-395
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    References listed on IDEAS

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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.
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    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, March.
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    Cited by:

    1. repec:spr:epolit:v:35:y:2018:i:1:d:10.1007_s40888-017-0088-9 is not listed on IDEAS
    2. 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.
    3. Can Huang & Naubahar Sharif, 2016. "Global technology leadership: The case of China," Science and Public Policy, Oxford University Press, vol. 43(1), pages 62-73.
    4. 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.
    5. Yu, Yang & Li, Hong & Che, Yuyuan & Zheng, Qiongjie, 2017. "The price evolution of wind turbines in China: A study based on the modified multi-factor learning curve," Renewable Energy, Elsevier, vol. 103(C), pages 522-536.
    6. repec:gam:jsusta:v:9:y:2017:i:11:p:2133-:d:119529 is not listed on IDEAS
    7. 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.
    8. Moriki Ohara, 2014. "Stratified domestic demand: the “seedbed effect” on automobile firms observed from county-level sales data," Chapters,in: The Disintegration of Production, chapter 7, pages 179-212 Edward Elgar Publishing.
    9. Eric Thun, 2016. "The Disintegration of Production: Firm Strategy and Industrial Development in China edited by Mariko Watanabe , Cheltenham , Edward Elgar , 2014 , vii + 347 pp," The Developing Economies, Institute of Developing Economies, vol. 54(3), pages 257-260, September.
    10. Brandt, Loren & Thun, Eric, 2016. "Constructing a Ladder for Growth: Policy, Markets, and Industrial Upgrading in China," World Development, Elsevier, vol. 80(C), pages 78-95.
    11. repec:pal:jintbs:v:48:y:2017:i:6:d:10.1057_s41267-017-0083-y is not listed on IDEAS
    12. Nahm, Jonas & Steinfeld, Edward S., 2014. "Scale-up Nation: China’s Specialization in Innovative Manufacturing," World Development, Elsevier, vol. 54(C), pages 288-300.
    13. repec:bla:tvecsg:v:108:y:2017:i:2:p:205-219 is not listed on IDEAS
    14. Florian Butollo, 2015. "Growing against the odds: government agency and strategic recoupling as sources of competitiveness in the garment industry of the Pearl River Delta," Cambridge Journal of Regions, Economy and Society, Cambridge Political Economy Society, vol. 8(3), pages 521-536.
    15. Abdalla, Carla Caires & Zambaldi, Felipe, 2016. "Ostentation and funk: An integrative model of extended and expanded self theories under the lenses of compensatory consumption," International Business Review, Elsevier, vol. 25(3), pages 633-645.

    More about this item

    Keywords

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

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L6 - Industrial Organization - - Industry Studies: Manufacturing

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