Economic statecraft in China's new overseas special economic zones: soft power,business or resource security?

China's rapidly growing economic engagement with other developing countries has aroused intense debates, but these debates have often generated more heat than light. The Chinese government is clearly pushing its companies to move offshore in greater numbers, and state‐owned firms figure prominently in many of the major investments abroad. Yet relatively little research exists on when, how and why the Chinese government intervenes in the overseas economic activities of its firms. China's state‐sponsored economic diplomacy in other developing countries could play three major strategic roles: strengthening resource security, enhancing political relationships and soft power, and boosting commercial opportunities for national firms. This article examines China's programme to establish overseas special economic zones as one tool of Beijing's economic statecraft. It traces the process by which they were established and implemented, and investigates the characteristics of the 19 zones initially selected in a competitive tender process. The article concludes that even in countries rich in natural resources, the overseas zones were overwhelmingly positioned as commercial projects. Particularly in the Asian zones, China is following in the footsteps of Japan. The zone programme, and the Chinese foreign investment it hoped to foster, represents a clear case of the international projection of China's developmental state. However, in Africa (but not generally elsewhere) discourse surrounding the zones publicly positions them as a transfer of China's own development success, thus potentially enhancing China's political relationships and soft power on the continent.     

Global Value Chains,Industrial Policy and Economic Upgrading in Ethiopia's Apparel Sector

This article examines whether low-income countries can still benefit from participating in manufacturing global value chains (GVCs) in terms of broader industrial development in a global context of greater competition and higher requirements. It contends that developing internationally competitive local firms and domestic linkages, in addition to upgrading, is crucial for participation in GVCs to drive industrialization. The study focuses on Ethiopia's recent experience with developing an apparel export industry through strategic industrial policy. Based on original empirical data collected through firm-level surveys and interviews with government officials, industry experts and buyers, the article analyses the upgrading and localization trajectories of foreign and local apparel-exporting firms. It argues that value-capture benefits in assembly positions in apparel GVCs have become more difficult. The potential for localization benefits depends on the type of global buyers and foreign producers and their levels of embeddedness, but whether this potential is realized also depends on local firm characteristics and related industrial policy. Ethiopia's industrial policy has been relatively successful regarding national economy linkages, but less successful in developing competitive local export firms due to a weak local manufacturing tradition combined with a global context that has led to a supplier squeeze.     

Multinational Knowledge Strategies,Policy and the Upgrading Process of Regions: Revisiting the Automotive Industry in Ostrava and Shanghai

This paper revisits how and why new multinational knowledge-based strategies and multi-level governmental policies influence the upgrading process of regions in developing economies. Automotive multinationals traditionally exploited local asset conditions, but it is shown that they have also been contributing to knowledge-generation systems via investments in R&D centres and cooperation with regional knowledge producers. We discern three elements of the upgrading process of regions—upgrading of domestic firms, subsidiary evolution and establishment of strategic relations with local knowledge institutes—to analyse two case studies: Ostrava (Czech Republic) and Shanghai (China). The cases show that all types of upgrading—product, process, chain and functional—have taken place in the last years, and that follow sourcing may have a positive impact on regional upgrading. These observations provide lessons for governments in developing economies which aim to strengthen innovation-based regional development.     

‘The Law is to Blame’: The Vulnerable Status of Common Property Rights in Sub‐Saharan Africa

The context of this article is the surge in large‐scale land acquisitions of African lands by local and foreign investors for commercial food, livestock, oil palm and carbon trading purposes. Involuntary loss of rural lands at scale is not new to Africa's majority rural poor, nor is it driven by a single factor. Historically inequitable land relations within communities, compounded by a century of capitalist transformation, take their toll. This study argues, however, that the weak legal status of communal rights is the most pernicious enabler in their demise, allowing governments to take undue liberties with their citizens’ lands, and particularly those which are unfarmed and by tradition held in common. While international acquiescence to abusive domestic law helps entrench the diminishment of majority land rights, the domestic laws themselves are principally at fault and necessarily the target for change. This legal vulnerability is explored here through an examination of more than twenty African land laws.     

The wider effects of inward foreign direct investment in manufacturing on UK industry

This paper examines the wider effects of inward foreign directinvestment (FDI) to the UK on improving the practices and competitivenessof domestic industry. Surveyed domestic suppliers, competitors,and customers to foreign investors reported extensive positiveimpacts on their practices, focused particularly on reductionsin X-inefficiencies, and on their competitiveness, althoughin the case of competitors benefits had to be balanced againstadverse effects. Knowledge transfers through personal contactsand the demonstration effect, were important to the transmissionof impacts, but a number of other channels were also important,including additional supplier sales, improved customer inputs,and the competitive spur. Regional policymakers should takethese wider benefits into account in the design of policiesfor attracting and embedding foreign investment. However, whilstthere was no evidence that foreign firms in assisted regionshad fewer benefits than those in core regions, there was a lotof leakage outside of the areas attracting foreign firms, suggestingthat policies to promote spillovers should not be developedentirely in a local or regional framework.     

Anchoring of Firms in the Neighbourhood: Does Local Social and Physical Order Affect Local Firms' Investment Strategies?

An increasing number of small- and medium-sized firms, whose low relocation propensity seems to point to strong local anchors, have moved to residential neighbourhoods. On the one hand, the neighbourhood context, an attractive production milieu with rich social network potential, may enable entrepreneurs to increase investments in either human capital (personnel) or physical capital (premises, production goods). These investments further anchor firms in a neighbourhood, where they contribute to a thriving local economy. On the other hand, high crime rates, a deteriorated physical environment and a lack of social capital can discourage entrepreneurs from investing locally. In this study, we conducted a multilevel analysis on the relative contribution of neighbourhood characteristics to entrepreneurial investment strategies and controlled for firm and entrepreneur characteristics. We found that neighbourhood cohesiveness and liveability—but not local market characteristics—make a small but significant contribution to explaining local entrepreneurs' investments. This contribution is even stronger for the smallest firms. Therefore, a spatially targeted policy aimed at improving social cohesion and safety is likely to benefit both residents and small local firms.     

How green is the valley? Foreign direct investment in two Norwegian industrial towns

Since the early 1900s, foreign direct investments (FDIs) have greatly affected Norwegian society, especially peripheral communities. This article analyses how transnational corporations (TNCs) use territory down to the local level, and how this complex relationship between firms and spaces is shaped by attributes related to the TNC and the characteristics of the local economy. An extensive literature discusses different types of effects and spillovers, such as vertical supply linkages and spin-offs, but theoretical explanations of outcomes are more difficult. The literature links positive as well as negative outcomes to local conditions and to the investment motives of the entity making the FDI, but says little about how these vary with types of business, communities and national economies, and how these interactions generate different outcomes. We conclude that FDIs have different abilities to transform an area. We argue that FDI can trigger path-dependent dependency when it is dominated by economic capital and path-dependent development when it consists of a balance of economic capital, social networks and knowledge. This variation in the effects of FDI is illustrated by an empirical analysis of two industrial towns in Western Norway, one with natural resources and the other with intangible technology resources.     

Innovations, Competitiveness and Local Embeddedness: A Study of Machinery Producers in Sweden

This paper is about technological relations and firm performance in the Swedish machinery industry. Taking its point of departure in the proliferating literature on the localized nature of learning and innovation processes, the paper sets out to answer three empirical questions: To what extent are firms integrated in localized production systems based on buyer-supplier relations? At what geographical level–local/regional, national or international–are the most important technological relations found? Is there a correlation between localized technological relations and the technological performance of firms? The results indicate that few firms display localized buyer-supplier relations. Rather, the industry is highly internationalized, with the most important customers and competitors located outside Sweden. In terms of technologically important relations, the domestic arena seems to be more important. The majority of the most important technological relations link the machinery producers to other actors in Sweden. Three out of four firms may be classified as predominantly local/regional or national in their technological relations, or technology profile. This survey therefore supports the notion that there exists both local/regional and national innovation systems. Finally, however, despite the fact that most firms are fairly locally embedded in their technology relations, there is no evidence that such embeddedness shows up as superior firm performance, in terms of technology level or innovative capacity.     

Building Peace with Conflict Diamonds? Merging Security and Development in Sierra Leone

This article examines the merging of security and development agendas in primary commodity sectors, focusing on the case of peace‐building reforms in Sierra Leone's diamond sector. Reformers frequently assume that reforming the diamond sector through industrializing alluvial diamond mining will reduce threats to security and development, thereby contributing to peace building. Our findings, however, suggest that the industrialization of alluvial diamond mining that has taken place in Sierra Leone has not reduced threats to security and development, as it has entailed human rights abuses and impoverishment of local communities without consolidating state fiscal revenues and trust in local authorities. This suggests alternative strategies for resource‐related peace‐building initiatives, which we consider at the end of the article: the decriminalization of informal economic activities; the prioritization of local livelihoods and development needs over central government fiscal priorities and foreign direct investment; and better integration between local economies and industrial resource exploitation.     

GROWTH,FOREIGN DIRECT INVESTMENT,AND THE ENVIRONMENT: EVIDENCE FROM CHINESE CITIES

ABSTRACT In this paper, we investigate the relationship between economic growth and industrial pollution emissions in China using data for 112 major cities between 2001 and 2004. Using disaggregated data, we separate foreign direct investment inflows from Hong Kong, Macao, and Taiwan from those of other foreign economies. We examine two industrial water pollution indicators (wastewater and petroleum‐like matter) and four industrial air pollution indicators (waste gas, sulfur dioxide, soot, and dust). Our results suggest that most air and water emissions rise with increases in economic growth at current income levels. The share of output of domestic‐ and foreign‐owned firms increases several pollutants in a statistically significant manner while output of firms from Hong Kong, Macao, and Taiwan either reduces pollution or is statistically insignificant.     

产业联系与外资溢出效应-对浙江省制造业的实证研究

本文探讨水平联系、前向联系和后向联系对外商直接投资溢出效应的影响。利用浙江省制造业数据,通过实证分析发现,浙江省制造业外资总体上具有水平负向溢出效应,同时通过后向联系产生正向溢出效应。水平负向溢出效应主要是外资企业带来的激烈竞争所导致的,产业后向联系产生的正向溢出效应主要通过外资企业的本地采购发生。浙江省内资制造业企业并没有从购买外资企业中间投入品而显著提升效率。     

Syrian refugee resettlement and the role of local immigration partnerships in Ontario,Canada

We examine Canada's recent Syrian Refugee Resettlement Initiative (SRRI) paying close attention to the resettlement role played by mid‐sized urban communities. We elaborate on a key policy dimension at work at this scale of action: local immigration partnerships (LIPs). We start with a very brief review of Canada's history of mass refugee resettlement. Second, we assess the policy of LIPs, particularly how they have been presented as a form of “place‐based policy,” and third, we offer an overview of the role the LIPs played in three case study communities (Hamilton, Ottawa, and Waterloo) during the SRRI. Finally, we present three overarching themes that emerged from our research in each of these communities: the importance of each community's history of immigration and refugee resettlement; the embeddedness of the LIP and its leadership in the local community; and how the positioning of each LIP relative to the three levels of government and its official Resettlement Assistance Program agreement holders impacted its ability to act. The history, location, and place characteristics of each community influenced the nature of intersectoral and intergovernmental relations in distinctive ways, and differentially shaped the effectiveness of each LIP's ability to contribute to the SRRI.     

Environmental Regulations and Multinational Corporations' Foreign Market Entry Investments

In this study, we examine how differences in environmental regulation characteristics are linked to multinational corporations' (MNCs) foreign market entry (FME) investments decisions around the world. We rely on a data set with 29,303 observations from 94 European Fortune Global 500 companies operating across 77 countries during the period 2001–2007. We found that MNCs are more likely to enter countries with more certain—i.e., clearer and more stable—environmental regulations than those of their home countries. Results also suggest that there is a higher level of MNC entry into foreign countries with environmental regulations that are more stringent than those of their home countries. This finding challenges the controversial but commonly held view that more stringent environmental regulations deter MNCs' FME investments. Notably, the magnitude of the regulatory certainty relationship with MNCs' FME investments is larger than that of regulatory stringency. Findings also indicate that the increased tendency of MNCs to enter countries with more stringent environmental regulations is higher in more democratic countries and for cleaner industry firms.     

STATE, CLASS AND INTERNATIONAL CAPITAL 2: THE DEVELOPMENT OF THE BRASILIAN STEEL INDUSTRY

This paper examines the forces underlying the development and form of the Brasilian steel industry since the 1930s. Foreign direct investment has been limited by Brasilian nationalist policies and by higher costs of steel production, but large scale, integrated plants could not be built by private capital due to insufficient resources. Thus the Brasilian steel industry combines large scale state owned plants (financed by foreign capital) and smaller scale privately owned plants. The operations of the plants are coordinated to reduce market uncertainty, permit the steel sector to advocate its own expansion plans, and delimit the spheres of public and private capital while excluding foreign commodity and productive capital. Even so, in the 1980s the steel industry in Brasil has faced a crisis of declining local demand, prompting a rapid expansion of exports.     

The Re-emergence of a Media Industry Cluster in Leipzig

This paper begins with the proposition that an analysis of the potentialities of industrial networks has to consider the wider context of the social organization of production. Recent work on industrial clustering has shown that successful clusters are embedded in tight networks of social relations between suppliers, producers, customers and institutions. Localized capabilities, such as specialized resources and skills, conventions and other local institutional structures, provide the basis for inter-firm cooperation. Based on Malmberg and Maskell's (2001) conceptualization of localized industrial clusters, I discuss the horizontal, vertical and institutional cluster dimensions as a basis for empirical analysis. In addition, attention will be drawn to the external dimension and power relations of a cluster which have a strong impact on its growth trajectory. This conceptualization is used as a basis for studying the new Leipzig media industry cluster. Leipzig, which is located in the Neue Länder (States of the former German Democratic Republic), has traditionally been a major centre of industrial production in Germany. After the German unification, a significant proportion of Leipzig's manufacturing activities were terminated or downsized. Interestingly, a new media cluster has developed during the 1990s, driven by the activities of the MDR (Middle German Television and Broadcasting Service). This has stimulated substantial start-up activities in branches of the media industry, such as film/TV production, new electronic services/interactive media, graphics/design, PR/marketing and media-related hardware/software. Being virtually the only sector which has grown in recent years, the media sector has stabilized the local economy. In this paper, I investigate those forces which have supported start-up and location decisions of media firms and the role of local institutions and policy programmes in the clustering process.     

BEYOND THE GPN–NEW REGIONALISM DIVIDE IN CHINA: RESTRUCTURING THE CLOTHING INDUSTRY,REMAKING THE WENZHOU MODEL

This article attempts to advance the research on industrial districts and regional development through a study of the restructuring of the clothing industry in Wenzhou Municipality, a regional driver of the Chinese economy. Wenzhou is known for the Wenzhou model of development traditionally centred on family‐owned small businesses embedded in local institutions. The clothing industry is one of the leading industries in Wenzhou, and a cluster with national significance has emerged, where most of the production components can be purchased locally. However, the industry has been scaled up nationally and internationally, with the expansion of sales networks and production facilities across China, and to a lesser extent, abroad. This restructuring has changed the endogenous nature of industrial clusters/districts. The restructuring challenges the orthodox notion of the Wenzhou model and the New Regionalism literature, particularly the orthodox notion of Marshallian industrial districts that overly emphasizes small firms and local assets, and the global production network perspective that highlights coupling with global lead firms in regional development.     

Local politics and foreign ventures in China's transitional economy: the political economy of Singaporean investments in China

The re-articulation of China into the global economy since December 1978 has led to a tremendous influx of foreign capital during the past two decades. Constrained by the limited domestic market and encouraged by home-country government, transnational corporations from Singapore are regionalising increasingly into the Asia Pacific region. To date, a significant amount of Singaporean investments abroad has gone to China. Based on personal interviews with parent companies in Singapore and their subsidiaries and/or affiliates in China, this paper aims to examine the political economy of Singaporean investments in China. Specifically, I argue that successful cross-border operations of Singaporean firms are embedded in dense networks of social and political relationships. These relationships provide the political leverage and strategic resources to enable the establishment of Singaporean firms in China. This establishment, however, is contingent on blending with local politics in China through which foreign firms use leverage on the partnership advantage of local governments (difang zhengfu), their enterprises, and business activities. This rise of local corporatism is a key institutional consequence of the recent rescaling of China's political economy. Case studies of ventures by Singaporean firms in China are presented to support my arguments. Taken together, these empirical materials shed light on the importance of understanding the role of politics at different spatial scales in influencing transnational corporations and their international business operations.     

In Search of an Innovative State: The Development of the Biopharmaceutical Industry in Taiwan,South Korea and China

Recent developments in the biopharmaceutical industry in Taiwan, South Korea and China bear witness to the transformation of these states in nurturing an innovation‐based industry. This article argues that the segmentation of the value chain of the biopharmaceutical industry has provided industrializing countries with a window of opportunity. These East Asian states have modified their former catching‐up approaches by establishing a more effective institutional platform that can attract knowledge‐creation players to the industry. Through case studies, the authors show that the Taiwan state's promotion of the biopharmaceutical industry has been based on an incremental approach; existing state policies have been modified to cope with the demands of the industry, which has resulted in the continuation of its SME‐based industrial structure. The methods of the Korean state have been more radical, in that the policies that previously favoured the chaebols have gradually been reoriented toward the promotion of smaller, science‐based firms that now co‐exist alongside the chaebols. Finally, the Chinese state and local governments have sought to promote this innovation‐based industry by building biotech parks. This approach has resulted in a boom in new science firms, which have become increasingly isolated from the flourishing domestic SOE‐led market.     

Competitiveness and Technological Upgrading in Global Value Chains: Evidence from the Indonesian Electronics and Garment Sectors

Indonesia is a rapidly growing and internationally competitive economy that is well integrated into globalized production systems. The global value chain (GVC) model has proven to be a popular analytical framework to explain how global lead firms structure and organize global production through dispersed global suppliers. Indonesia's leading export sectors, garments and electronics, are well integrated into GVCs. Engagement in GVCs, often led by leading global brands, is seen as a basis for local producers to become globally competitive and to grow. It also comes with challenges—local producers must meet the demanding pressures from lead firms on prices, on-time delivery, product quality, and social, environmental and labour standards. The possibilities for local producers to learn, acquire new capabilities and upgrade to enhance their competitiveness are often conditioned by the nature of ties that they have with their global lead firms. Yet, this paper argues, the GVC model fails to recognize agency on the part of local firms in this learning process. Moreover, particular forms of governance arrangements within GVC ties can restrict the prospects for local producers to enhance capabilities and upgrade. Drawing on selected case study evidence from the Indonesian garments and electronics sectors, the paper explores the relationship between distinct types of GVC engagements and firm-level learning and upgrading, and considers how some GVC ties may restrict upgrading.