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The Political Economy of Industrial Policy in China: The Case of Aircraft Manufacturing

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  • Andrea Goldstein

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Abstract

Since 1960, only one new country, Brazil, has succeeded in delivering more than one civil jet per month. Otherwise, all the countries now offering world-class planes were established in aviation by the end of World War I. This being said, low-cost producers within several of the newly emerging markets have already acquired front-end manufacturing expertise as a direct result of industrial offset contracts and/or other forms of technology transfer. In all such cases, government intervention, notably through state ownership, has been predominant, but failures have been numerous in view of the difficulty of aligning ownership structure to financial, managerial, and technological requirements and of garnering the support of domestic interest groups. In this paper the focus is China???s efforts to build a world-class aircraft manufacturing industry. In the first half of the 1990s the potential of the Chinese industry to mount a competitive challenge to Western aircraft builders was largely discounted. Nowadays, as China strives to bear the ARJ-21 project to execution and even considers entering the market for wide-bodies, the threat is taken more seriously. The growth in the Chinese air transport market has reinforced the bargaining power of national aircraft producers and authorities are giving priority to building science and technology capacity in this area. Progress in creating military/civilian synergies has proven much more modest ??? especially when compared to the shipbuilding industry ??? and better coordination in the overall industry comes a distant fourth in the explanations??? peaking order.

Suggested Citation

  • Andrea Goldstein, 2005. "The Political Economy of Industrial Policy in China: The Case of Aircraft Manufacturing," William Davidson Institute Working Papers Series wp779, William Davidson Institute at the University of Michigan.
  • Handle: RePEc:wdi:papers:2005-779
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    File URL: http://deepblue.lib.umich.edu/bitstream/2027.42/40165/3/wp779.pdf
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    References listed on IDEAS

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    1. Lawrence J. Lau & Yingyi Qian & Gerard Roland, 2000. "Reform without Losers: An Interpretation of China's Dual-Track Approach to Transition," Journal of Political Economy, University of Chicago Press, vol. 108(1), pages 120-143, February.
    2. Andrea Goldstein, 2002. "The political economy of high-tech industries in developing countries: aerospace in Brazil, Indonesia and South Africa," Cambridge Journal of Economics, Oxford University Press, vol. 26(4), pages 521-538, July.
    3. Nolan, Peter & Zhang, Jin, 2003. "Globalization Challenge for Large Firms from Developing Countries:: China's Oil and Aerospace Industries," European Management Journal, Elsevier, vol. 21(3), pages 285-299, June.
    4. Frankenstein John, 1999. "China's Defense Industries: A New Course?," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 5(1), pages 1-44, January.
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    Cited by:

    1. Daaniel Vertesy & Adam Szirmai, 2010. "Interrupted Innovation: Innovation System Dynamics in Latecomer Aerospace Industries," Globelics Working Paper Series 2010-02, Globelics - Global Network for Economics of Learning, Innovation, and Competence Building Systems, Aalborg University, Department of Business and Management.
    2. Vertesy, D., 2014. "Successive leadership changes in the regional jet industry," MERIT Working Papers 046, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    3. Vértesy, Dániel, 2017. "Preconditions, windows of opportunity and innovation strategies: Successive leadership changes in the regional jet industry," Research Policy, Elsevier, vol. 46(2), pages 388-403.
    4. Rock, Michael T. & Toman, Michael & Cui, Yuanshang & Jiang, Kejun & Song, Yun & Wang, Yanjia, 2013. "Technological learning, energy efficiency, and CO2 emissions in China's energy intensive industries," Policy Research Working Paper Series 6492, The World Bank.
    5. Holz, Carsten A., 2011. "The unbalanced growth hypothesis and the role of the state: The case of China's state-owned enterprises," Journal of Development Economics, Elsevier, vol. 96(2), pages 220-238, November.

    More about this item

    Keywords

    aerospace; China;

    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • L62 - Industrial Organization - - Industry Studies: Manufacturing - - - Automobiles; Other Transportation Equipment; Related Parts and Equipment
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology

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