local responses to global economic restructuring: chin and the west dr. shiuh-shen chien visiting...
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Local Responses to Global Economic Restructuring:
Chin and the West
Dr. Shiuh-Shen CHIEN
Visiting Research Fellow, East Asian Institute, NUS
Paper presented in the International Conference on Globalization and Economic Development in the Chinese Economic Circle, June 22-23, 2007
A Concept of Territorial Process
Global economic restructuring
macro responses: Territorial competition
micro responses: formation of self-interested agents
Varied entrepreneurial localities
Structure of Presentation
Introduction: the phenomenon of entrepreneurial localities
Global Economic Restructuring Local Macro Response: Territorial
Competition Local Micro Response: self-interested
agents Conclusion, Territorial Process,
Chinese Style
Introduction: entrepreneurial localities
Schumpeter’s typology for firm innovation
Typology for entrepreneurial localities
New products New spaces of production
New technical methods of production
New methods for space of productions
New consumption market
New markets for spaces of consumption
New sources of supply New financial sources
New forms of industrial organization
New positions in the urban/regional hierarchy
Introduction: entrepreneurial localitiesTypology of EL West cases Chinese cases
New spaces of production
Entrepreneurial zones,
economic develop. Zones
New methods for space of productions
Hard/ soft infrastructure
Marketization system
New markets for spaces of consumption
Entertainment/ tourist spaces
Xintiande in Shanghai
New financial sources EU structural funds
Innovative local fundraising
New positions in the local/urban hierarchy
Brussels Vice provincial city
Research Questions Weakness of these researches: EL were
naturally able to be made for the purpose of better local economic development under the context of globalization
Research question: how, why and under what circumstances and by whom entrepreneurial localities can be formed and evolved in different contexts of globalization restructuring - such as liberal democracy v.s.
one party authoritarian systems
Globalization Restructuring
The socialist regime extensive accumulation through
state-led industrialization redistributive functions of states
The Fordist Regime economy of scale Keynesian welfare state
The post-socialist regime intensive accumulation through
commoditization and spatial fix (export-orientation zones)
marketization entrepreneurial States
The post-Fordist Regime economy of scope
neo-liberalism and post-Keynesian workfare state
Tra
nsit
ion
Liberal economiesTransition economies
Macro responsesLocal Authority in Transition
After the 1970s/80s, local authorities as a new spatial form to manage economic development (the tendency of decentralization)
Local authorities become more entrepreneurial (instead of managerial), and therefore, compete with each other.
Regional Consequences of TC
Weak competition efficiency-depleting(vicious circle)
-- race to the bottom-- free charge of
infrastructure-- lowering regulations for
labour/environmental conditions
Strong competition growth-enhancing(positive feedback loop)
-- race to the top-- external networking-- benchmark
assessment-- labour training-- helping establishment
of business
Race to the top for Local Business
Southeast
BohaiNortheast
CentralSouthwest
Northwest
Taxes and Fees relative to sales 4.1 % 4.5 % 5.4 % 5.0 % 6.3 % 5.8 %
Annual bureau. Interactions (days)
52 72 63 52 66 78
Entertainment (to officials) /sales
1.0 % 0.9 % 1.4 % 1.2 % 1.2 % 1.3 %
Average Custom clearance (days)
7.3 8.6 12.6 13.8 14.0 16.8
Source: World Bank (2006). China: Governance, Investment Climate, and Harmonious Society: Competitiveness Enhancements for 120 Cities in China. Report NO. 37750-CN
Table: Business environment in China
War of development zones- in 2003, nearly 70% of 5,000 zones in China were developed without permits of the central government
Tax rebate policy competition-
3 mein 2 jian bain 5 mein 5 jian bain Duplicate constructions- more airports, seaport
s, and industry….
Race to the top for Local Business
The West: residents and investors and products can move cross boundary freely, and unified jurisdiction system
China: local protectionism in (1) productive resources and capital
(2) trade semi and final goods (3) movement of individuals(4) fragmented juridical system
Market fragmentation (MF) in China
Overproduction price war Miniaturization of investment projects Limited regional specialization of industrial
structures Too reliance on FDI because MF applies to
domestic investments than to FDI, e.g. HK one-day export trip
Regional Consequences of TC behind Market Fragmentation in China
Local Micro Responses: self-interested agents in the West
Elite-dominated local politics (instead of pluralist local politics)
self-interested parties with strong stakes in territorial economic success, particularly elected politicians and local land developers growth machine, urban regime…..
collective actions leading to public-private coalitions;
Self-interested agents in China (1) Difference (1): property right issue
-- protection of property right in China only exist after 2007 March limited influences of the private sectors in the past
Difference (2): party-government relations
-- one party control in China with state-led civil society and medial
local officials are rule makers, rule enforcers, referees and players de facto owners of public-owned companies
Self-interested agents in China (2) Difference (3)- political incentives
-- leaders not elected locally but selected by the upper-level governments with performance-based management in China
political centralization under the party and careerism in local officials: the more growth, the better the chances to get personal advancement, with increasing power and other rewards
Upward/downward accountability
Local govt.
Central Gov.t
Decentralized economic powers and resources
Development plans; Preferential policies, Infrastructures
Aggregate economic performances: GDP, revenues, jobs
performances reviews: career reappraisal
career appointments: yearly performance targets, 5-year plan China’s context
Western context
Local citizens and firms
Popularity survey; lobbying, community participation
election, funding, ‘voting with feet’
Micro-level economic and service and quality-of-life outcomes
Conclusion: TP, Chinese Style (1)
Territorial process (TP), composing of macro and micro mechanisms, is a good theoretical framework to understand local responses to global economic restructuring
TP taking place in China, but in different mechanisms from the west– territorial competition in China was along with fragmented market, and self-interested agents are local officials in careerism
Conclusion: TP, Chinese Style (2)
Theoretical contributions: as a supplements to existing literatures on the phenomenon of new regionalism, as well as to the discussion on various types of local officials involving economic development
Further research- territorial competition (at the macro level) and upward accountability (at the micro level) in relation to local good governance
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