Yangtze River Delta's system integration: institutional barriers and countermeasures

This paper addresses the issue of institutional barriers to the Yangtze River Delta integration and the resulting slow development. It analyzes the problems including the coordination of local interests and regional interests, market segmentation during the regional integration, competition for the local government‘s investment on the public goods, labor movement within the delta. The paper argues that to reduce the negative impacts of these barriers and to promote the further integration of the Yangtze Delta region, the central government should strengthen the coordination between local governments, regulate their disorderly competition and reform the official evaluation system.

Domestic Market-based Industrial Cluster Development in Modern China

China’s huge domestic market is constantly expanding, and is low-end demand oriented and highly dispersed. The domestic market-based development of China’s industrial cluster, however, is not only a quantitative expansion, but has also been accompanied with remarkable qualitative upgrading. Specialized markets are a microcosm that clearly indicate this paradoxical phenomenon. By analyzing three typical cases of industrial clusters that have specialized markets, this paper will make the case that under modern China’s market conditions, the local public sector is the crucial driving force for upgrading industrial clusters, which organize complicated transactions, promote quality control, and stimulate the division of labor.

Chapter 5 Industrial Policy, Structure, and Locations during the Transition toward a Market-oriented Economy in Myanmar

This paper examines Myanmar's industrial policy, structure, and locations during the transition from a centrally planned economy to a market-oriented one throughout the 1990s and up to the present. After the military government assumed power in 1988, it abandoned the socialist centrally planned economic system and began instituting a market-oriented one through a series of liberalization and deregulation measures, although most of which have stalled since 1997 and remain half-way implemented. Against this background, it is rather surprising that the impact of these new policies of international trade, finance, regulations, licensing and ownership requirements on industrial structure and location in Myanmar has been poorly documented and examined to date. Some key issues to understanding the impact and effectiveness of the market-oriented policies during the last two decades in Myanmar remain to be answered: Have the new trade and industrial policies changed the industrial structure and organizational behavior in Myanmar? Have they improved the performance of Myanmar's industrial sector? Have they had any impact on industry location in Myanmar? This paper reviews the series of liberalization programs implemented under the military government?the State Law and Order Restoration Council (SLORC) and the State Peace and Development Council (SPDC)?and assesses their impact on industrial structure and its spatial distribution.

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.

Distribution System of China's Industrial Clusters: Case Study of Yiwu China Commodity City

This paper discusses the issue of upgrading industrial clusters from the perspective of external linkages. It is taken for granted that in most developing countries, due to the limited domestic market and poor traditional commercial networks, industrial clusters are able to upgrade only when they are involved in global value chains. However, the rise of China’s industrial clusters challenges this view. Historically, China has had a lot of industrial clusters with their own traditional commercial networks. This fact combined with its huge population resulted in the formation of a unique external linage to China’s industrial clusters after the socialist planning period ended. In concrete terms, since the 1980s, a traditional commercial institution . the transaction market . began to appear in most clusters. These markets within the clusters get connected to those in the cities due to interaction between traditional merchants and local governments. This has resulted in the formation of a powerful market network-based distribution system which has played a crucial role for China’s industrial clusters in responding to exploding domestic demand. This paper explains these features in detail, using Yiwu China Commodity City as a case study.

Changes in the foreign trade structure of the Russian Far East under the process of transition toward a market economy

Under the process of transition toward a market economy, the economic connections of the Russian Far East (RFE) with external regions changed from a division of labor among the regions of the USSR (Russia) to an international division of labor. This happened due to factors including the liberalization of the trade system away from a state monopoly, the presence of rich natural resources and of developed industries related to these resources, the advantage of geographically proximity to Asia-Pacific countries, and the political and economic division of the once unified national economic space during the process of transition. The economic connections of RFE with external economies changed radically under the transition toward the market economy. First, the value of foreign trade increased dramatically and the importance of foreign trade for the RFE economy increased enormously. Second, however, different territories of RFE traveled along different trajectories, due to factors involving their industrial structure and geographical conditions. Third, in recent years connections with China, in the areas of both exports and imports, have grown. Fourth, the share within exports of "fuel, mineral resources and metal" increased radically from the end of the 1990s, and the share of "machine, facilities and transportation means" increased from 2002 year within imports. Under this situation, especially since 2002, there has been a major change in the structure of foreign trade.

A Divergent Path of Industrial Upgrading: Emergence and Evolution of the Mobile Handset Industry in China

Starting from almost null in the late 1990s, China's mobile phone handset industry has grown to account for more than 40 percent of the current world production. While export growth has been overwhelmingly led by multi-national corporations (MNCs), increasingly fierce competition in the domestic market ignited by the advent of local handset makers has induced unique industrial evolution: (1) outgrowth of independent design houses specialized in handset development and (2) emergence of IC fabless ventures that design core ICs for handsets. In the background of this evolutionary industrial growth there are factors such as, the scale and increasing diversity of China's domestic market that advantages local firms vis-a-vis MNCs; modularization of handset and semiconductor technologies; policy interventions that supports local startups. The emergence and evolution of China's handset industry is likely to have international implications as the growth of the global demand for low-cost and multi-function mobile phone handsets is expected to accelerate. Thus, our case suggests that the conventional view of latecomer industrialization and upgrading that emphasizes the key role of international production networks organized by MNCs needs to be modified in order to accommodate China's rise into perspective.

Industrial Policy in Asia

This paper examines three types of industrialization that have occurred in East Asia: the Japanese, Chinese and generic Asian models. Industrial policies in Japan and the Republic of Korea (ROK) initially protected local companies from foreign investors by imposing high tariffs on foreign investors. But Japan began introducing liberalization policies to attract foreign direct investment (FDI) in the 1960s, and the ROK began to welcome foreign technology in the 1970s. Meanwhile, the governments of the ASEAN countries and Taiwan established export-processing zones (EPZ) to invite FDI by offering preferential treatment, such as tax deductions and exemptions. China adopted similar industrial policies and also established EPZs, attracting the capital and know-how of multinationals and thereby strengthening the international competitiveness of local enterprises. This paper reaches the following three conclusions. First, it would have been difficult for East Asian countries to grow without FDI. Second, central governments were a crucial factor in these countries' growth strategies. Third, EPZs offering preferential treatment can effectively enhance aggregate growth in developing countries, and the Asian experience shows that this strategy can be applied to other countries that satisfy certain preconditions.

The Diversity and Dynamics of Industrial Organisation: Transformation of Local Assemblers in the Vietnamese Motorcycle Industry

This paper focuses on an emerging arm's-length form of industrial organisation in the motorcycle industry, which had traditionally been characterised by tightly integrated form of organisation. By engaging in how this new form of organisation that emerged in China was transferred to Vietnam and evolved in the Vietnamese context, this paper seeks to illustrate how the rise of local firms in developing countries is driving the increased diversity and dynamics of industrial organisation in an industry that had previously been dominated by TNCs from developed countries.

Chapter 6 Economic integration and changes in industrial location in Vietnam

Vietnam has been praised for its achievements in economic growth and success in poverty reduction over the last two decades. The incidence of poverty reportedly fell from 58.1% in 1993 to 19.5% in 2004 (VASS [2006, 13]). The country is also considered to have only a moderate level of aggregate economic inequality by international comparisons. As of the early 2000s, Vietnam’s consumption-based Gini coefficient is found to be comparable to that of other countries with similar levels of per capita GDP. The Gini index did increase between 1993 and 2004, but rather slowly, from 0.34 to 0.37 (VASS [2006, 13]). Yet, as the country moves on with its market oriented reforms, the question of inequality has been highlighted in policy and academic discourses. In particular, it is pointed out that socio-economic inequalities between regions (or provinces) are significant and have been widening behind aggregate figures (NCSSH [2001], Mekong Economics [2005], VASS [2006]). Between 1993 and 2004, while real per capita expenditure increased in all regions, it grew fastest in those regions with the highest per capita expenditures and vice versa, resulting in greater regional disparities (VASS [2006, 37]). A major contributing factor to such regional inequalities is the uneven distribution of industry within the country. According to the Statistical Yearbook of Vietnam, of the country's gross industrial output in 2007, over 50% belongs to the South East region, close to 25% to the Red River Delta, and about 10% to the Mekong River Delta. All remaining regions share some 10% of the country's gross industrial output. At a quick glance, the South East increased its share of the total industrial gross output in the 1990s, while the Red River Delta started to gain ground in more recent years. How can the government deal with regional disparities is a valid question. In order to offer an answer, it is necessary in the first place to grasp the trend of disparities as well as its background. To that end, this paper is a preparatory endeavor. Regional disparities in industrial activities can essentially be seen as a result of the location decisions of enterprises. While the General Statistics Office (GSO) of Vietnam has conducted one enterprise census (followed by annual enterprise surveys) and two stages of establishment censuses since 2000, sectorally and geographically disaggregated data are not readily available. Therefore, for the moment, we will draw on earlier studies of industrial location and the determinants of enterprises’ location decisions in Vietnam. The remainder of this paper is structured as follows. The following two sections deal with the country context. Section 2 will outline some major developments in Vietnam’s international economic relations that may affect sub-national location of industry. According to the theory of spatial economics, economic integration is seen as a major driver of changes in industrial location, both between and within countries (Nishikimi [2008]). Section 3, on the other hand, will consider some possible factors affecting geographic distribution of industry in the domestic sphere. In Section 4, existing literature on industrial and firm location will be examined, and Section 5 will briefly summarize the findings and suggest some areas for future research.

Innovating global value chains : creation of the netbook market by Taiwanese firms

This paper explores the process of creation of the netbook market by Taiwanese firms as an example of a disruptive innovation by latecomer firms. As an analytical framework, I employ the global value chain perspective to capture the dynamics of vertical inter-firm relationships that drive some firms in the chain to change the status quo of the industry. I then divide the process of the emergence of the netbook market into three consecutive stages, i.e. (1) the launch of the first-generation netbook by a Taiwanese firm named ASUSTeK, (2) the response of the two powerful platform leaders of the industry, Intel and Microsoft Intel, to ASUSTeK’s innovation, and (3) the market entry by another powerful Taiwanese firm, Acer, and explain how Taiwanese firms broke the Intel-centric market and tapped into the market-creating innovation opportunities that had been suppressed by the two powerful platform leaders. I also show that the creation of the netbook industry was an evolutionary process in which a series of responses by different industry players led to changes in the status quo of the industry.

Exploring the sources of China's challenge to Japan : models of industrial organisation in the motorcycle industry

In view of the recent rise of China, this paper looks into one of the most important yet relatively overlooked ingredients of the Chinese success: industrial organisation. It will examine the case of the motorcycle industry, in which the rise of Chinese manufacturers even disrupted the established dominance of Japanese industry leaders. Adopting the modified version of the global value chain governance framework, this paper shows that the rise of China has been driven by a distinctive arm’s-length model of industrial organisation, which is in sharp contrast to the conventional captive model that has sustained the Japanese leadership.

The Japanese and Chinese models of industrial organisation : fighting for supremacy in the Vietnamese motorcycle industry

This paper explores the consequences of the emerging rivalry between Japanese and Chinese manufacturers. It focuses specifically on industrial organisation, one of the key factors that underlie the competitiveness of manufacturing industries. The question to be asked is what happens when distinctive models of industrial organisation, coming from Japan and China, clash in a developing country. An in-depth longitudinal analysis of the Vietnamese motorcycle industry adopting a modified version of the global value chain governance theory shows that a decade-long industrial transformation resulted in organisational diversity. The implications of the analysis for the literature on industrial organisation are discussed.

Is the Vietnamese garment industry at a turning point? : upgrading from the export to the domestic market

Vietnam’s garment industry has been loosely characterized by the duality based on market orientation: export and domestic. Export-oriented garment suppliers were typically SOEs and foreign invested firms, while those producing for the domestic market have been mostly small, private companies. With a booming economy, other industrial sectors have emerged, and the garment industry is no longer the sector most favored by workers. Wage rates have been increasing, and a supplier’s ability to cope with this through successful upgrading has been the key determinant of whether it can further grow and flourish. Those who fail to cope are finding themselves in an increasingly difficult position. This paper looks at both the export- and domestic-oriented garment suppliers, and attempts to highlight how the industry can further develop by examining the bottlenecks that vary depending on the type of supplier. It suggests that in the long run, upgrading and value addition in the domestic market will be the key strategy.