Manual Clusters and Economic Growth in Asia

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Industrial Cluster Development and Innovation in Singapore | SpringerLink

These benefits are essentially fiscal and financial FIAS, , but usually firms have also access to better infrastructure and services and also laws and regulations use to be more market friendly. These differences were higher especially at the beginning of the Chinese reform process. Today, instead, differences are much lower as demonstrated by the fact that foreign firms often prefer not to invest or to invest less in SEZs than in other areas of the country. Several typologies of industrial clusters have been highlighted in the literature. For example, it is possible to distinguish between Marshallian industrial districts and the Italianate variant , hub-and-spoke districts, satellite industrial platforms and state-anchored industrial districts Markusen, Such conventions can regulate the production relation within the cluster, with positive and sometimes negative outcomes Granovetter, Indeed, clustering can generate second-best market solutions conditioning the regional development paths, as in the case of financing problems arising in less industrialised areas in China.

Understanding India’s economic geography

Long and Zhang, Clusters, instead, operate in low technology and labour-intensive industries Long and Zhang, Second, clusters have an industrial specialization that SEZs and science parks do not have. Moreover, there is no physical infrastructure qualifying an industrial cluster. Finally, clusters do not follow any technology- or fiscal-driven development trajectory. Each one of these characteristics has its own relevance in determining the conditions for clusters development and their success in competition World Bank, Chinese clusters are mainly localised in the Eastern area of the Country and their concentration grows, moving towards Southeast.

THE INNOVATION CHALLENGE

The biggest agglomerations of clusters are mainly located in the Provinces of Jiangsu, Shanghai, Zhejiang, Fujian and Guangdong, areas where the GDP per capita is generally higher than the national average Wang and Mei, As in the case of electronic products in Shenzhen Guangdong , some clusters have been generated by the sole exploitation of the industrial capabilities provided by SEZs experiences Zeng, Moreover, the industrial and trade advantages developed through time in the area undoubtedly have become propitious factors also for that largest number of clusters spontaneously born and autonomously operating in several sectors Wang and Mei, ; Zeng, Nonetheless, the main features of this kind of policy initiatives are more deeply driven by the central government in China than in other countries in order to generate both the conditions and the incentives to industrial development.

In the case of the ZJHT park in Shanghai, for example, the most part of the actions, such as planning, investment, training and even the evolution processes, has be planned by the central government for compensating a missing entrepreneurship, especially in the case of biotech by the support of the National Shanghai Biotechnology and Pharmaceutical Industry Base Su and Hung, Nonetheless, sometimes high-tech cluster can successfully developed also a mix of clusters and non-clusters externality as in the case of the mobile TLC manufacturing in the Beijing area.

Here, in fact, the cluster formation process has be driven by the settlement of a transnational corporation as NOKIA that has created new market opportunities and based on a relational proximity Yeung et al.

However, policy interventions often occur only after a cluster has been formed. However, this is not always the case in China. This is the case of some areas of China and especially the Costal Provinces. For example, the textile industry in Xiqiao Guangdong was prosperous already during the Tang Dynasty AD and more than one thousand factories were created during the s by dismissed workers moving from restructuring state-owned enterprises to private entrepreneurship Wang and Yue, In the same way, the footwear industry in Wenzhou Zhejiang has a long history starting in AD and experienced a proliferation of family businesses exploiting the new opportunities provided by the economic and political reforms at the end of the s Wang, For example, the Italian districts often originated spontaneously, exploiting specific natural resources or local socio-economic conditions, growing around a large firm or replacing it Poma, and compensating the lack of both financial capital endowment and governmental stability.

However, in all these processes the main element is the endowment of informal social and institutional capital generated by the spontaneous agglomeration and providing the concrete capabilities to exploit positive externalities performing a competitive advantage.

Comptetitive Cities in the 21st Century: Cluster-Based Local Economic Development

Recalling the examples cited above, the spontaneous development of the Wenzhou footwear cluster was followed by a phase of government-induced clustering. Thus the local administration of Wenzhou has played an active role providing the needed infrastructures and instituting development policies Wang, in the s. Something very similar occurred also in Zhili in the Province of Zhejiang Fleisher et al.

Prodi, The case of Foshan is very interesting because, after 30 years of fast development of the ceramic tiles industry, the local Govern decide to consider not strategic anymore this industry, that is too polluting and not enough value adding compared to other industries developing in other close areas.

This practically meant less governmental support and a more binding respect of the laws. As a consequence, in a few years many ceramic tiles firms had to close and many other decided to move in different places. Understanding the growth drivers and identifying high-potential markets at a granular level are critical priorities for businesses looking to benefit significantly from this returning tide of growth.

Taking into account their existing footprints, product mixes and extensions, and long-term aspirations, companies could consider three approaches to dissect the Indian market and decipher its heterogeneity: states, clusters, and cities. This analysis used Insights India, a tool kit that provides estimates based on the macroeconomic outlook for India and on more than 20 economic, demographic, and social variables at the state, district, and city levels.

These variables include population, the sector composition of GDP, government finances, investment, urbanization, education, labor participation, plans for infrastructure development, and the availability of basic services. For the purposes of this work, we have used a base-case scenario of gradual recovery, which assumes an annualized GDP growth rate of 6. Our research focuses on distinct geographic slivers of opportunity at each level of granularity. We have classified states into four broad groups based on their relative per capita GDP: very high performing, high performing, performing, and low performing.

That in turn makes it possible to estimate future market demand for specific categories of goods and services. Very high-performing states are those with more than 2. High-performing states have an average GDP per capita 1.

Companies considering a granular pan-India play could target metropolitan clusters. Top-ranked metropolitan districts constitute the nucleus of these clusters, and the surrounding high-potential districts make them serviceable markets with similar psychographics Exhibit 2. We define high-potential districts as those that had the highest share of GDP in and will account for the highest share of incremental GDP through The clusters are also at least at par with India as a whole on core development parameters, such as access within the household to basic urban services like water supply, sanitation, and electricity.


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They are therefore appropriate for companies looking to expand into areas where access to basic infrastructure does not pose a binding constraint. Within the urban areas, the report focuses on the top cities, distinguishing between metropolitan areas and others in this group.

Rise of Asia in a Changing Global Economy

For example, in India had 54 metropolitan cities, which together with their hinterlands 65 districts accounted for 40 percent of GDP and 45 percent of consuming-class households. In short, focusing on these 79 districts would provide companies with access to a market potential similar to that offered by the eight high-performing states Exhibit 3. To get the most from this granular approach, companies need to develop customized strategies for each geographic sliver.