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    31 July 2018, Volume 37 Issue 7 Previous Issue    Next Issue
    Regional industrial development and evolution: Path dependence or path creation?
    Canfei HE
    2018, 37 (7):  1253-1267.  doi: 10.11821/dlyj201807001
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    Regional development is a process in which industries develop, transform and upgrade constantly. Evolutionary economic geography understands the spatial evolution of firm, industry, cluster, network, city and region through the lens of firm entry, growth and exit, and argues that regional industrial evolution is path dependent and determined by inter-industrial technological relatedness. However, path dependence theory overemphasizes the endogenous factors in regional industrial development and ignores the critical role of external linkages and institutional factors, which would bring path creation for regional development. In China, there has been dramatic transformation in regional industrial structure since the economic reform. Empirical studies indicate that technological relatedness has indeed significantly determined regional industrial evolution, suggesting a path dependent process. Meanwhile, marketization, globalization and regional decentralization provide great opportunities to create new industries for regional development. In particular, external linkage, institutional factors and purposeful and strategic actions of local actors would stimulate path creation.

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    Orginal Article
    Characteristics of economic evolution and the influencing factors of resource-dependent cities in China: The role of path dependence, vulnerability and path creation
    Changhong MIAO, Zhiqiang HU, Fengjuan GENG, Jianming MIAO
    2018, 37 (7):  1268-1281.  doi: 10.11821/dlyj201807002
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    Taking 116 Chinese resource-dependent cities as research objects, this paper analyzes the economic evolution characteristics and path differentiation of resource-dependent cities from three aspects of path dependence, vulnerability and path creation. The econometric model is adopted to study the roles of the three aspects on economic growth and structure transition of resource-dependent cities, and the factors that affect the three aspects are also analyzed. The results are shown as follows: (1) Resource-dependent cities in northern China are of higher path dependence. Vulnerability of north and inland areas is generally higher, while path creation ability decreases from the coast to the inland. Some cities are of higher vulnerability and lower path creation, such as those of Heilongjiang, Shanxi, Shaanxi, Gansu, Yunnan, Guizhou and Sichuan. (2) Evolution paths of China's resource-dependent cities can be divided into three types: the tendency to be lock-in, the tendency to unlock and random variation. (3)The effects of path dependence, vulnerability and path creation on economic growth and transition will differ under different macroeconomic circumstances: vulnerability is conducive to economic growth when macro-economy expands rapidly, and cities with strong path creativity are slower to grow. When Chinese economy enters the new normal stage, it presents that the path dependence and vulnerability would hinder the economic growth. (4) Path dependence and path creation are greatly affected by population scale and the proportion of state-owned enterprises. The level of vulnerability is mainly related to population agglomeration. The proportion of mining industry affects the path creation of resource-dependent industry, while the openness degree affects the path creation of non-resource industry. The north, inland and coal-dependent cities are prone to be of high path dependence. (5) The key of reducing path dependence and improving path creation is to upgrade population scale and decrease the proportion of state-owned enterprises. Population agglomeration and opening to the outside world are conducive to the decline of vulnerability and the promotion of path creativity. Different and targeted policies and measures should be implemented by taking into account the regions, resource types and evolutionary paths of resource-dependent cities.

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    Determinants of the spatial variation of new firm formation in China's metal product industry
    Jin SHI, Canfei HE
    2018, 37 (7):  1282-1296.  doi: 10.11821/dlyj201807003
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    New firm formation is one of the driving forces of spatial restructuring of industries because it represents entrepreneurship in a regional context. Its spatial variation has attracted growing attention among economic geographers, regional analysts as well as policy makers. Existing research seems to overemphasize local factors (e.g. market demand, labor supply, agglomeration economies and the level of economic freedom) at the expense of regional, national, and global factors. Using the Annual Survey of Industrial Firms from 1998 to 2007 in China, this paper takes the metal product industry as an example to explore the determinants of the spatial variation of new firm formation. By calculating the rate of new firm formation using the ecological approach at the city level, it reveals that the hot spot of start-ups in the metal product industry shifted from coastal to inland China, especially towards the central region. It then establishes an analytical framework which not only encompasses multi-scalar factors, namely 'global linkage, regional competition, and local environment', but also takes firm heterogeneity into consideration. The random effect panel Tobit model at city level suggests three major findings. (1) To the extent of global linkage, new firms were disposed to locate in export-oriented cities endowed with cheap labor; the more the city was closely linked to the world market, the greater the attraction of cheap labor was. Low-efficient start-ups would run after cheap labor, but their high-efficient counterparts were able to strike a balance between labor cost and labor quality. (2) To the extent of regional competition, cities with large market potential would foster new firm formation. (3) To the extent of local environment, new firms were attracted to cities with a higher level of marketization. Localization economies have no significant effect on new firm formation whereas related variety only fosters high-efficient start-ups. This paper enriches the empirical research on the spatial variation and its determinants of new firm formation in China by providing evidence for the metal product industry, which is labor intensive, and domestic market oriented with a moderate level of technology. It also provides reference to local governments on policy incentives for start-ups, which is particularly relevant against the backdrop of 'mass entrepreneurship and innovation' campaign recently in China.

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    Resilience and resistance of local industry to economic crisis: A case study of China's IT industry
    Chen WANG, Yiqiong GUO
    2018, 37 (7):  1297-1307.  doi: 10.11821/dlyj201807004
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    Little research has been done on the resilience and resistance of local industries the play a major role in regional economy. This study investigates the main influencing factors of the regional economic resilience of China's IT industry, with a large-scale firm-level survey data from National Bureau of Statistics. Our regression analyses reveal that the firm heterogeneity within the regional industry, the role of local technology gatekeepers, the openness, dynamics and business structure of the local industry jointly exert significantly positive influences on the regional economic resilience of China's IT industry. This suggests that the hub-and-spoke industrial districts may be more resilient than the Marshallian industrial districts under the transitional background of China. Local governments should encourage the co-existence of heterogeneous firms in terms of knowledge base, attract new and younger firms, maintain an open environment for local industries and pay more attention to the leading role of technological gatekeepers so as to enhance the economic resilience of local industries.

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    Institutional evolution and regional economic resilience: A comparison of two resource-exhausted cities in China
    Xiaohui HU, Wenzhong ZHANG
    2018, 37 (7):  1308-1319.  doi: 10.11821/dlyj201807005
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    The existing literature on economic resilience of cities and regions shows that attention has been mainly paid to its characterization as capabilities and outcomes, while little research has been conducted on it as processes. This paper aims to address this knowledge gap. Drawing upon institutional change theories, this paper proposes an approach, and tries to explain how different modes of the institutional change affect industrial evolution and thus generate divergent resilience of cities. The approach is applied to the two case studies of Chinese mining cities, namely Zaozhuang in Shandong province and Fuxin in Liaoning province, which are both faced with resource depletion since 2000. By focusing on the ways in which new industries emerge, the empirical investigation illustrates that Zaozhuang's resilience involves positive layering and conversion that have enabled industrial renewal and diversification, whereas Fuxin's resilience unfolds with institutional thickening, characterized by industrial adjustment with strong effects of path persistence and extension. This study suggests that the institutional change approach can better update the understanding of regional resilience by incorporating processes, capabilities and outcomes.

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    Co-evolution and cluster development: Case study for Yuzhou Jun porcelain industrial cluster in Henan province
    Kewen LYU, Changhong MIAO, Jing WANG, Huan DING
    2018, 37 (7):  1320-1333.  doi: 10.11821/dlyj201807006
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    Cluster evolution has attracted much attention during the past decade in economic geography. Evolutionary economic geography and new life cycle theory can be used to explain the process of cluster evolution from emergence, growth, maturity to recession/regeneration. Different from the existing literature emphasizing the co-evolution of enterprises, industry and networks, this paper constructs an analytical framework for the co-evolution of institutions, technology, government and market, which takes enterprise as the key actor. Through the case study of Yuzhou Jun porcelain industrial cluster, we found that the emergence and growth of the cluster is a process of co-evolution of multi-factors and multi-mechanisms. (1) The interaction of institutions, technology, government and market, as well as the internal mechanisms such as path dependence and path creation, knowledge spillover and enterprise's spinoff, returns to scale and cumulative causation, and plays different and synergistic roles in different stages of cluster evolution. (2) The co-evolution between institutions and technology, based on local resource endowment and historical-cultural tradition, has a path dependence mechanism and make the initial impetus and advantages for local porcelain production, which is the fundamental source of cluster emergence and vitality maintenance. (3) The transition to the market economy and the reform of the state-owned enterprises pushed by the government have led to a great increase in private enterprises through the spinoff mechanism; and the market scale effect of the rising consumption for the Jun porcelain products and the expansion of the new market space provide a valid demand for the enterprises to spin off and expand their scale significantly. Based on the cumulative causation mechanism, the interaction between government and market has exerted the mutual reinforcement effects on the production and market scale for Jun porcelain industry, and promoted the Jun porcelain industrial cluster to grow rapidly. (4) The cluster evolution is a complex adaptive process in which the path dependence and path creation are restricted and promoted mutually. The innovations such as Jun porcelain burning technology, process, glaze and product shape/function are the fundamental source of enterprises' survival and competitiveness. The unique local industrial atmosphere makes the knowledge spillover and path creation mechanisms become the core power for the sustainable development of Jun porcelain industrial cluster.

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    Evolution of non-state sector in the Pearl River Delta based on a historical institutional analysis
    Wenying FU
    2018, 37 (7):  1334-1348.  doi: 10.11821/dlyj201807007
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    Historical institutionalism is an approach to studying regional development, and is characterized by the comparative setting embedded in historical and institutional environment. Using a historical institutional perspective, this paper attempts to shed lights on how historical endowments and local conditions affect the development path of localities within the context of transition economies. Empirical analysis is operationalized using a comparative case in two cities, Dongguan and Foshan, in the Pearl River Delta, China. Based on a time series of secondary data from the provincial and municipal statistical yearbooks from 1978 to 2012, we analyze the structure of non-state sector and its evolution in the wake of the opening up policy. Political devolution and fiscal decentralization has invoked the human agency to exploit the value of extra-local social networks in Dongguan, which has led to the rapid development of rural collective sector. In contrast, strong presence of social networks within the old planned system in Foshan has led to the dependence to the local government to secure resources and credit, and thus develop the urban collective sector. The close coalition between government and industry has created a vested interest in the collective sectors, which has further resulted in the sticky inertia of ownership transformation in the late 1990s. In Dongguan, the rural community organizations forged close ties with investors based on kinship, short-term contracts and management fees. At that time, neither the rural community organizations nor the overseas investors were willing to make long-term investments in the growth of the enterprises. Therefore, the complexity in transferring ownership right has been much lower in Dongguan. In consequence, insider privatization is more commonly practiced in Foshan, while Dongguan tends to adopt the form of outsider privatization. Although the organization of rural collective sector has led to a smoother process of ownership reform in Dongguan, the underdevelopment of local technological and entrepreneurial talents, as well as the incapability of local government to offer support in innovation-related infrastructure and governance could potentially influence its private sector in the long run. Overall, the historical institutional perspective suggests that the divergent path of the localities has been attributed to the ways the economic agents utilize the unique historical assets and social networks in the localities, and has resulted in path dependency at the later phase of reform and development.

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    The process and dynamics of high-tech industrial branching in China's metropolitan areas: A case study of biotechnology industry in Wuhan
    Zhigao LIU, Wei ZHANG
    2018, 37 (7):  1349-1363.  doi: 10.11821/dlyj201807008
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    The recent development of evolutionary economic geography, particularly of "regional branching", has provided both theoretical perspective and methodological tools for our understanding of the formation of new industries and the branching of existing industrial structures. The existing research on "regional branching" originated in western and developed countries has been putting "technology relatedness" at the core, focusing on the relationship between emerging industries and local established technologies. It is necessary to examine the applicability of analysis framework to China experiencing marketization and globalization. Based on the core concepts of evolutionary economic geography, combining with other approaches from other economic geographies and industrial economics, this article strongly argues that special attention should be given to the impacts of higher level political, economic and technological factors on regional branching in China's metropolitan areas. This article insists that the emergence and evolution of China's high-tech industry is the combined result of the local and global forces, the historical conditions and concentrated efforts, and technological innovation and institutional changes. And it builds a multi-scale and multi-factor dynamic analysis framework for our understanding of high-tech industrial branching in China's metropolitan areas. This article examines the processes and driving elements of the emergence of new industries in the contexts of transitional and globalizing China, taking the emergence of the biotechnology industry of Wuhan as a case, with an aim to understand the processes and dynamics of high-tech industry in the Chinese metropolitan areas. The methods used in this article include case studies, field research, in-depth interviews, spatial analysis and statistical data analysis. The main research outputs include: the technological relatedness, the universities and research institutes and enterprises are of much importance to the emergence of Wuhan biotechnology industry, local governments, multinationals, and overseas returnees, are also important factors, which are different from those in developed countries where new technology producing institutions are regarded as being critical to industrial branching. To a large extent, high-tech industry development in China is currently still on the factor-intensive and quantity-driven path, rather than an innovation-based one.

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    Competitiveness and function specialization of national central cities in China: An empirical study based on headquarters of China's pubic listing firms
    Fenghua PAN, Bofei YANG
    2018, 37 (7):  1364-1376.  doi: 10.11821/dlyj201807009
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    National central cities have strong competitiveness and specialized functions in selected sectors. Headquarters are the command and control centers of firms and the quantity of headquarters of large firms in a city reflects the city's commanding function. Thus, it is ideal to use the distribution of large firms' headquarters to measure national central cities' competitiveness and specialized functions. Based on a dataset of China's public listing firms, this paper explores the commanding functions of Chinese cities and their evolutions by calculating the command and control index (CCI). The empirical results show that (1) Beijing and Shanghai are the two most powerful command and control centers in China. Beijing obtained a significant increase in command function during 2005-2014, while Shanghai's CCI decreased. The rise of public listing firms from the finance sector contributes most to growing CCI of Beijing. (2) The finance and manufacturing are the two sectors with the highest CCI in China. The finance sector has gradually taken the leading role in determining a city's command role. According to the analysis of the national central cities, Beijing, Shanghai and Guangzhou have obvious advantages in most industries and are nationwide comprehensive big city. The functional specialization of central cities in the remaining five national central cities is relatively low. In addition, there are obvious differences in the inter-linkages between the development of the central cities of eight national central cities and the surrounding areas. The reason for this is the extent of regional economic development and the characteristics of urban industrial development.

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    Market similarity and the evolutionary path of China's export market expansion
    Qi GUO, Shengjun ZHU
    2018, 37 (7):  1377-1390.  doi: 10.11821/dlyj201807010
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    Based on the extended gravity model and evolutionary economic geography, this paper uses Kernel density distribution and econometric models to investigate the path of export market expansion in urban China and its micro-mechanism at the firm level by using 2002-2011 China Customs Database. To quantify the evolutionary path of export market expansion, this paper measures the inter-national market similarity based on the co-occurrence analysis and then calculates the market similarity between export destinations and firms' (or cities') export market network, which is used as an important explanatory variable in the econometric models. The results show that the market that is more similar to cities or firms' previous destinations is more likely to be expanded as a new destination, implying that cities' and firms' export market expansion in China presents the pattern of path dependence. This study also examines the co-evolution of cities' and firms' market expansion. The city-level evolution in the east is path created, which may derive from firms' path dependence. Knowledge spillover effect within the same city plays a significantly positive role in the firms' market evolution. Therefore, the co-evolution of cities' and firms' market expansion is the key mechanism of export market expansion path in China.

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    Export spillovers from foreign invested enterprises and export market extension of domestic enterprises
    Shengjun ZHU, Xuqian HU, Canfei HE
    2018, 37 (7):  1391-1405.  doi: 10.11821/dlyj201807011
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    Since the economic reforms of the late 1970s, foreign invested enterprises have contributed much to China's economic development and local business growth. Based on the export information of China Customs from 2001 to 2011, this paper constructs the balance panel data at city-product-destination scale. Using the Conditional Logit method, this paper explores the spillover effect of China's foreign invested enterprises on export decision-making of domestic enterprises. The empirical results show that there is a significantly positive spillover effect on the export decision of domestic enterprises. This paper also analyzes the heterogeneity of export destinations and export cities. Results show that the export spillover effect of foreign invested enterprises is more significant when there exist large economic, geographical, political or institutional distances between the export destinations and China. The spillover effect of China's central and western cities is more significant than that of eastern cities. The results of this paper illustrate that the export activities of foreign invested enterprises can play an important role in helping the domestic enterprises develop new foreign markets.

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    Regional division of labour and its environmental performance in the context of trade liberalisation
    Xiyan MAO, Canfei HE
    2018, 37 (7):  1406-1420.  doi: 10.11821/dlyj201807012
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    Foreign trade can induce the regional division of labour in pollution-intensive sectors. There are also concerns on a likely polarisation of pollution emission in the wake of regional division. This study incorporates a dynamic perspective into the regional division of labour, which becomes a synergy of specialised agglomeration and industrial dynamics. The location quotient is applied to assess the level of specialised agglomeration. An index is also constructed based on co-occurrence probability to capture the route of industrial dynamics. Thus, a simultaneous equation model is constructed to empirically examine the linkage between local environmental performance and regional division of labour, and the role of foreign trade in such a linkage. An "industry-city-year" data panel is established to support the empirical study, which covers 261 prefectural-level cities and 30 industries at the two-digit level with the study period spanning from 2003 to 2009. The results show that an increasing scale of agglomeration is likely to generate various crowding-out effects, resulting in less co-agglomeration of related industries. It will, in turn, keep the industrial mix from moving towards a locked-in way. On the other hand, environmental regulation has been efficient in emission reduction, effectively reducing the probability of introducing new pollution-intensive sectors. To summarize, although the expansion of foreign trade can promote the level of specialised agglomeration, it is less likely to polarise the pollution emission among regions. The results may offer insightful references for managing the tradeoffs between foreign trade and the environment. First, there is a spatial asymmetry between pollution-intensive sectors and their non-pollution-intensive counterparts. The non-pollution-intensive sectors tend to avoid the co-location with the pollution-intensive sectors. In such cases, the co-agglomeration between pollution-intensive and non-pollution-intensive sectors can crowd out the non-pollution intensive ones in its early stage. The efforts on developing non-pollution-intensive sectors should pay off in the long run. Second, there are both active and passive ways to keep regions from being locked in pollution production. Previous efforts may focus on the role of active ways, such as the environmental regulation. However, it is also beneficial to take advantage of the passive ways.

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    Theoretical thread and problems of strategic coupling
    Yi LIU
    2018, 37 (7):  1421-1434.  doi: 10.11821/dlyj201807013
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    This paper critically reviews the theoretical thread, contribution and problems of the studies of strategic coupling. By examining the conceptualization, explanatory variables and the analytical framework of this concept, it finds that the spatiality of strategic coupling is ambiguous. The three-fold typology and mechanism is based on empirical observation, while lacking of theoretical reasoning based on spatial variables. By learning from the studies of global production network and global value chain, this paper argues that the strategic coupling studies shall be advanced by absorbing spatial variables from traditional studies in economic geography, rather than from other disciplines. As an attempt, this paper proposes two spatial variables, locational advantage (LA) and spatial stickiness (SS), for explaining the formation, variety and impacts of strategic coupling in the globalization of latecomer regions. Leveraging the low-high weight of the proposed new variables, there are three potential types of strategic coupling. When LA and SS are both low, captive coupling tends to happen in which later-comer firms and regions play as a follower of global leading firms. When LA and SS are both high, absorptive coupling become possible in which late-comer actors have high bargaining power to negotiate for ideal partnership with global leading firms. When LA is high while SS is low, cooperative coupling may happen in which both counterparts exchange resources under a relatively balanced power relationship. In contrast, when LA is low while SS is high, strategic coupling will not happen. This paper contributes to the literature of global production network by fixing the problem of spatial ambiguity of strategic coupling. The proposed new variables are derived from traditional studies in economic geography so that the strategic coupling can draw upon many classical theories and studies. This effort reminds the disciplinary position of strategic coupling for being an economic geographical study. This renewed framework has salient implication for latecomer economies. On the one hand, by analyzing the spatial stickiness of an industry, we can evaluate the potential of industrial relocation or upgrading within a region and then strategize relevant policies to slow or facilitate the process. On the other hand, for fostering regional assets, a region shall focus on immobile resources such as domestic market environment, regionalized production networks and local talents, rather than using replicable policies such as fiscal incentives.

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    Retailing supply networks transformation and upgrading within the global production networks (GPN): The case studies of fresh milk and edible oil
    Yue WANG
    2018, 37 (7):  1435-1446.  doi: 10.11821/dlyj201807014
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    Over the last decade, the intensive and rapid retail internationalization has attracted wide attention across the social sciences. In particular, the local supply network impacts from retail transnational corporations (TNCs) purchasing activities have been discussed extensively by academic scholars, especially in terms of the host economies of Latin America. However, it is surprising that little similar research has been conducted in the world's biggest retailing market - China. Thus this paper adopts the global production networks (GPN) approach to explore these local supply network transformations in the Chinese market, and also identifies the mechanisms of upgrading process. The GPN framework refers to networks of firms and institutions, which pinpoints where value is created, enhanced and then captured throughout supply networks, highlights the dynamics of power within these webs of production, and reveals how retail TNCs make their attempt at embedding themselves in local markets. With the extensive interview-based fieldwork undertaken in Shanghai, China between 2014 and 2015 on two specific local supply networks, i.e., branded fresh milk and own branded edible oil, the paper examines the five ongoing shifts of the procurement activities adopted by retail TNCs in the host market. They are centralization of procurement, upgrading logistical systems, adoption of the specialized/dedicated wholesalers, private-standards enforcement and the development of private labels. The analysis demonstrates significant variations in both retailer management practices and strategic responses by suppliers between the two products. It reveals the dynamic power relations among retail TNCs, suppliers, wholesalers and logistics providers. In addition, a considerable restructuring and reconfiguration process has taken place in the local distribution, wholesale and agricultural production sectors, due to the increasing power exercised by retail TNCs. Finally, the paper calls for an in-depth study on the retailer power and its impacts based on the nuanced and dynamic approach, in an aim at better understanding the complexity and unevenness of supply network restructuring in emerging markets.

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    Local embeddedness and global production network of industrial clusters: Case study of the cultural creative districts in Shanghai
    Jinliao HE, Xianjin HUANG, Yuefang SI
    2018, 37 (7):  1447-1459.  doi: 10.11821/dlyj201807015
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    The recent emergence of creative industries in Shanghai received much attention from policy and urban studies. Previous literature concentrated primarily on local cluster policy and the association with urban regeneration, while the embeddedness to what extent creative clusters in Shanghai are linked with different geographical levels of market has yet been fully understood. This paper aims to examine the structure of economic linkages of highly agglomerated creative clusters in Shanghai from the perspective of global production networks (GPNs) theory. By GPNs, both local and non-local forces are taken into account through an examination of the value-chains of production and consumption, namely labor market, external supply of intermediate inputs, customers, firms, and collaborators. Results show that the creative clusters in Shanghai are globally embedded into multi-scale markets. First, there is an evident tendency towards localization in every branch of linkages, especially in the labor market and external supply sides. Whereas, the international interactions are strongly observed in the consumption and collaboration sides, such as culture media and R&D industries. In addition, foreign collaboration in the operation of the creative economy in Shanghai is particularly significant because of their interdependent and complimentary relationship. This study also provides an important reference to reveal the mechanism of the formation of GPNs and local embeddedness of creative clusters in the metropolitan areas of China.

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    Market reorientation and industrial upgrading trajectories: Evidence from the export-oriented furniture industry in the Pearl River Delta
    Tianlan FU, Chun YANG
    2018, 37 (7):  1460-1474.  doi: 10.11821/dlyj201807016
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    In the aftermath of the 2008 global financial crisis, export-oriented industries in China have engaged in the transition from exports to focusing on both exports and domestic sales. However, the impact of market reorientation on industrial upgrading of manufacturing firms remain understudied. Drawing upon the global production networks (GPNs) perspective, this study explores the upgrading trajectories of export-oriented firms in their market reorientation towards China's market. This paper takes the export-oriented furniture industry in the Pearl River Delta (PRD), China as a case. On the basis of in-depth interviews, results suggest that furniture firms are strategically coupled with China's domestic market by establishing networks relations, intra-firm coordination relations, and market-based relations with domestic agents. Market reorientation has stimulated variegated upgrading trajectories of furniture firms. Some furniture firms gained functional upgrading opportunities, while some experienced industrial downgrading. The research on industrial upgrading in the market reorientation could enrich the literature by exploring the implications of the rise of emerging markets in the post-crisis era. It also helps to understand the transformation of export-oriented industries in China in the contemporary global economy.

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