1. Global Capitalism and China's Uneven Integration into the World Economy.
- Author
-
Ling Chen
- Subjects
- *
CAPITALISM , *POLITICAL science ,ECONOMIC conditions in China ,CHINESE politics & government - Abstract
Despite discussions about China's rise as a global manufacturing titan and the world's third largest trading economy, few notice the unevenness of China's integration into the world economy. While some Chinese export producers have shown signs of climbing up the global value chain, most others are still trapped in a downward spiral of "race to the bottom" competition based on cheap prices. What accounts for this local variation despite the availability of cheap labor throughout coastal areas? Based on comparative case studies, the paper finds that contrary to the expectation of both neoclassical economics and state-led development theory, export upgrading was neither a natural product of market competition nor a sheer outcome of deliberate government promotion of capital-intensive investment. Rather it resulted from the complex interaction between foreign capital on the one hand and local export institutions that took root before the entrance of FDI on the other hand. While local institutions heavily influenced the direction and the magnitude of FDI's impact on local export activities, the influx of FDI at a particular period also revised the institutional arrangements governing the behavior of local governments and export businesses. This produced intended and unintended effects on the likelihood of ruinous competition or export upgrading. The paper concludes that in a transformed eraâ??one in which outsourcing and offshore production has increasingly segregated the source of proprietary knowledge from manufacturing, one should go beyond the pure focus on the amount of capital-intensive exports and high-tech investment, and should devote more attention to the important role of social coordination in overcoming ruinous competition and in nurturing the indigenous capacity for innovation and upgrading. ..PAT.-Unpublished Manuscript [ABSTRACT FROM AUTHOR]
- Published
- 2009