Industrial Clusters, Upgrading and Innovation in East Asia
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Industrial Clusters, Upgrading and Innovation in East Asia

Edited by Akifumi Kuchiki and Masatsugu Tsuji

This lucid and informative book analyzes the problem of clusters in transition through studies of agglomerations at different stages of development in various East Asian countries.
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Chapter 9: Interaction between Transnational Corporations and Local Government on Industry Clusters in China: The Case of the Automobile Industry

Xiyou He


Xiyou He 9.1 INTRODUCTION Industry clusters are recognized as playing a significant role in both regional economic development and growth of transnational corporations (TNCs) in the globalization context (Head et al., 1995; Porter, 1998; Barrell and Pain, 1999). In China, there are two main kinds of industry cluster patterns. One is the market-created cluster, such as those specialized industry clusters in Zhejiang Province; the other is the policyconducted industry cluster, such as those development zones that are led mainly by foreign direct investment (FDI) by TNCs. As economic development and growth in China have been strongly driven by government industrial policy and FDI utilization (Jiang, 2002), the latter form of industry cluster is more popular than the former in China. Industry clusters in China are the ground of interaction between government industrial policy and TNC FDI. One of the remarkable mechanisms for economic development and growth in China is to attract FDI into various development zones or industrial parks, such as Special Economic Zones, Economic and Technological Development Zones, High and New Technology Industry Development Zones, Export Processing Zones, and so on. FDI contributions to the host economy listed by Dunning (1993) are obvious in China. Sustainably increasing FDI contributes greatly not only to trade, employment, and fiscal revenue, but also to industrial upgrading. In particular, very many development zones and industrial parks have led to industrial clustering and regional economic development in the coastal areas of China. Local governments have acted positively to attract FDI. Especially, in the early...

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