Theory of a Flowchart Approach to Industrial Cluster Policy

A flowchart approach to industrial cluster policy emphasizes the importance ofthe ordering of policy measures. The flow of policy implementation is to establish an industrial zone, to invite an anchor company, and to promote its related companies to invest in the industrial zone. This article delineated "a flowchart approach to industrial cluster policy" by proposing sufficient conditions for forming industrial clusters typical in the manufacturing industry in Asia to enhance regional economic growth. The typical industrial cluster policy was theorized by defining an industrial zone as "quasi-public goods", and it was shown that the policy enhances economic growth under a production function of "increasing returns to scale" of an anchor company. Critical amounts of the production of "scale economies" that are used by the related companies to decide whether or not to invest in clusters were also shown.

Theoretical Models Based on a Flowchart Approach to Industrial Cluster Policy

This article examined the issue of whether or not the currency exchange rate, country risk, and cooperate tax rate affect decisions of multinational firms to invest in industrial clusters. First, if the exchange rate between a multinational company in an industry of diminishing returns to scale and a developing country is appreciated, then production in the developing country should increase. Second, if the investment period becomes longer, the currency exchange rate of a multinational company's country should be revalued more in order for it to further invest in the developing country. Third, if the investment period becomes longer, the developing country's risk should become less. Fourth, compensation for the developing country's high risk can be made by lowering its corporate tax rate.

Prioritization of Policies: A Prototype Model of a Flowchart Method

This paper builds a prototype model of how to prioritize policies by using a flowchart. We presented the following six steps to decide priorities of policies: Step 1 is to attain the social subsistence level (primary education, health care, and food sufficiency); Step 2 is to attain macroeconomic stability; Step 3 is to liberalize the economy by structural adjustment programs; Step 4 is capacity building specific to a growth strategy by facilitating sufficient infrastructure (physical infrastructure and institutions); Step 5 is to initiate a growth strategy; and Step 6 is to narrow income inequalities. We illustrated the effectiveness of our "flowchart method" in case studies of Morocco, Laos, Vietnam, and China. The first priority of reforms in Morocco was given to social sectors of primary education and health care, particularly in the rural areas at Step 1. Laos should not put much emphasis on growth strategy before educational reform, attainment of macroeconomic stability, and institutional capacity building at Steps 1, 2, and 3. Vietnam can focus on reforming the state-run enterprises and developing the stock markets at Step 5 of growth strategies. We found that we should apply our flowchart method to China not nation-wide but province-wide.

The Flowchart Model of Cluster Policy: The Automobile Industry Cluster in China

This paper proposes a general model of the flowchart approach to industrial cluster policy and applies this model to Guangzhou's automobile industry cluster. The flowchart approach to industrial cluster policy is an action plan for prioritizing policy measures in a time-ordered series. We reached the following two conclusions. First,we clarified the effects of Honda, Nissan, and Toyota on agglomeration in Guangzhou's automobile industry cluster. Second, we established that local governments play a crucial role in successful industrial cluster policy, and that the mayor of the local government should be offered incentives in order to target industrial clustering and implement cluster policy.

A Flowchart Approach to Malaysia's Automobile Industry Cluster Policy

In this paper, we apply a flowchart approach to investigate Malaysia's automobile cluster policy. We investigate whether the industrial cluster policy has been successful or not, suggest policy prescriptions, and propose a way to prioritize policy measures. Our flowchart approach leads to the following three policy prescriptions: (1) Malaysian firms should establish sites for exporting compact cars with automatic transmissions; (2) actors in the public, semi-public and private sector should work to upgrade skilled labor; and (3) the central government should promote liberalization and deregulation to attract foreign firms into the supporting industries.