Industrial Districts and Innovation
Murphree & Breznitz Paper
Background / Framework
The Wenzhou model in China resembles industrial district approaches found in many countries across centuries. In the 19th century US wooden clock and leather shoe manufacturing resembled this model, with the “putting out” of an individual production step to a group of farm families. In Japan porcelain production and teapot production were similarly subdivided. Other examples include furniture production in Italy and North Carolina, while a host of carpet manufacturers arose around Dalton, Georgia.
This is in contrast with the vertical integration models in which a firm (or entire industry) operates at several stages of the value chain. In the auto industry, for example, car companies control design, product integration, body-in-white welding & painting & final assembly, and engine manufacturing. It is also in contrast with the custom design approach, in which a firm such as Apple or Samsung can design a highly capable core chip, unique batteries and displays, and other components that help them differentiate their products, with the cost of these components offset by production volume in the 10s or 100s of millions of units that drives down per-unit fixed costs and allows capital-intensive manufacturing approaches.
Industrial districts have often proved good at adapting to new styles but fragile to changes in core product design. In contrast, Dongguan supported innovation. What characteristics are needed for innovation to occur? What structures enable the cost-effective manufacturing of new components and designs? What enables firms to work with one another?
This should be a short paper of 3-5 pages. This is not a research paper. It is intended instead to get you to think about the readings on the course schedule web page repeated below (2 background papers plus the Murphree paper, supplemented for Econ 243 by readings on the evolving vertical structure of the auto industry. In other words, it will prepare you for the visit by Professor Murphree.
Make clear the specific question upon which you focus your discussion in your first 1-2 sentences. Develop that topic briefly. Your final paragraph should be a conclusion, and should repeat neither your introduction nor the substantive points of the body of the paper.
Keep your prose “sharp,” with care to prune modifiers, avoid the passive voice, and eschew using parallel verbs (“A and B”) or adjectives. Don’t include vague words: “some” “very” “large” “generally” and the like. They are imprecise and add nothing.
Due in class on Friday 10 February.
- Huang, Zuhui, Xiaobo Zhang, and Yunwei Zhu. 2008. “The Role of Clustering in Rural Industrialization: A Case Study of the Footwear Industry in Wenzhou.” China Economic Review 19(3): 409–20.
- Murphree, Michael, and Dan Breznitz. 2017. A New Take on Economic Development in China’s Pearl River Delta. University of South Carolina and University of Toronto. Early working paper.
- Shen, Xiaoxiao, and Kellee S. Tsai. 2016. “Institutional Adaptability in China: Local Developmental Models Under Changing Economic Conditions.” World Development 87: 107–27.