Elsevier

World Development

Volume 126, February 2020, 104701
World Development

Getting the specialization right. Industrialization in Southern China in a sustainable development perspective

https://doi.org/10.1016/j.worlddev.2019.104701Get rights and content

Highlights

  • We focus on ICT clusters performance in terms of innovation but also and above all of socially sustainable development.

  • We analyze ICT clusters within the specialized town program in Dongguan city, Southern China.

  • Educated local population and foreign linkages improve ICT clusters’ innovation.

  • Social sustainability can be improved in ICT clusters by long experience of public actors in building collective action.

Abstract

Information and communication technologies (ICT) are acknowledged as a powerful tool used to foster development and to broaden people’s agency. This being so, ICT are also the results of specific production processes. And, little attention has been given to the degree of sustainability that the places that are currently in charge of producing ICT attain. In this framework, we investigate under what conditions specializing in ICT products rewards a territory in terms of technological innovation and socially sustainable development. Our analysis focuses on the case of Dongguan city, China, which is a core area in the global production of ICT. Industrialization in this area has been mainly FDI-led and framed within a Province-level industrial specialization policy – the Specialized Towns program. We perform an empirical analysis based upon a unique township-level dataset covering several years (2000–2016). We then integrate the quantitative data with qualitative fieldwork information on Dongguan ICT-specialized townships. Our findings suggest that (1) specializing in ICT can pay in terms of innovative performances, provided it is supported by an institutional setting aimed at collectively promoting innovation, a sufficient degree of extra-cluster relations and a sufficiently high level of education of the population. (2) Social sustainability can be improved in ICT clusters by long experience in public involvement towards building collective action. Since many of these areas do not currently show to have reached such social and economic conditions, they risk being captured in a middle income-low development trap. Governments targeting ICT specialization should then focus also on devoting specific policy initiatives towards social inclusion.

Introduction

Both traditionally and in recent times, industrial development has been identified as one of the drivers of economic growth and poverty alleviation (Haraguchi, Cheng, & Smeets, 2017). Industrialization processes have also entered the international debate about sustainability given their potential to promote innovation and provide decent jobs (European Commission, 2010). Inclusive and Sustainable Development (ISID), intended as an industrialization process providing fair involvement and rewards to large strata of global population (UNIDO (United Nations Industrial Development Organization), 2015a), has indeed been promoted as a leading strategy within the UN agencies, connecting social, environmental and economic aspects of development to achieve the Sustainable Development Goals (SDGs). Goals 8 (Promote inclusive and sustainable economic growth, employment and decent work for all), 9 (Build resilient infrastructure, promote sustainable industrialization and foster innovation) and 12 (Ensure sustainable consumption and production patterns) highlight the role of good industrial practices in contrasting the multi-dimensional features of unsustainable growth. Increasingly, ISID points out that the discussion is no longer about whether governments should promote industrialization, but what kind of industrialization they should promote (UNIDO, 2015a). In particular, Agenda 2030 for Sustainable Development stresses that this should entail new models of responsible consumption and production, decent jobs, environmental sustainability and no one being left behind by unbalanced processes of growth (United Nations, 2015).

One of the most important mechanisms triggered by industrialization to achieve inclusive development rests in technology and innovation (SDG 9). Even the economic success of a country relates to the extent to which structural changes of the economy are coupled with technological catch-up and the country’s ability to produce innovation (Lavopa & Szirmai, 2018). In this framework, new technologies and ICT are key tools in connecting people and territories and empowering large strata of the population (United Nations, 2018). This is in line with a long-lasting debate about the possible benefits of ICT diffusion (Niebel, 2018): such benefits are mainly studied from the end-users perspective,1 be they either people, companies or governments (Asongu & Le Roux, 2017) and are recognized as essential tools for Agenda 2030 for sustainable development (Sachs, 2012, United Nations, 2018).

However, while the risks and benefits associated with ICT on the consumption side are acknowledged, ICT has to be considered also as the output of specific manufacturing processes; it represents a distinct manufacturing sector, located in specific places around the world. This being so, such places do not necessarily correspond to the final markets for ICT products and, particularly when they are in developing countries, they are more likely to become export hubs (Steinmueller, 2001, Xing et al., 2011). The impact of this specific production on the hosting communities has been rather neglected (Hughes et al., 2017, NLC (National Labour Committee), 2009). In other words, special attention should also be given to the social sustainability – broadly defined as a set of conditions that allow improving living conditions of current and future generations (Boström, 2012) – of the territories engaged in ICT production. From this perspective the issue of what is happening to the places that produce ICT to the benefit of the rest of the world arises. Are they experiencing innovation and socially sustainable development thanks to their specialization in this particular sector? Again, what are the conditions that make ICT specialization a “good choice” in terms of innovation and development? These are the driving questions of this paper.

Recent contributions have suggested that regions, and even more so cities and clusters, are the most appropriate units of analysis to understand economic and social change dynamics in contemporary economies (Barca et al., 2012, Garretsen et al., 2013, Giuliani et al., 2005, Iammarino, 2018). This immediately indicates that attention needs to be placed on the clustered dimension of industrialization.

Within the extremely vast literature on clusters, some recent contributions have suggested a renewed theoretical framework, accounting for multiple possible paths of development for any cluster including the post-maturity stage (Martin, 2010). In other words, whether a cluster is deemed to reach stasis and lock-in or rather renew itself is inherently an empirical question (Martin, 2010). There is therefore still room for further investigation on clusters experiences, particularly in emerging economies (Morrison et al., 2008, Yang et al., 2009).

Furthermore, while clusters’ growth, competitiveness and innovation have been largely studied (Baptista, 2000, Bell and Albu, 1999, Breschi and Malerba, 2005, Thompson, 2002, only to cite some), social and human development has remained much more marginal. It has been explored by the literature on Italian industrial districts (Becattini, 1990, Becattini et al., 2009, Bellandi, 2002, Piore and Sabel, 1986), which even so, mainly dealt with light industries, given the specialization of these localities. In the specific context of high-tech clusters, there is a lack of evidence on the conditions allowing social sustainability (de Oliveira, 2008, Etzkowitz, 2013), particularly in relation to clusters in developing world, for which the main focus has been on innovation and economic performances (Giuliani et al., 2005, Manning et al., 2010, Wang et al., 2010, Zhou, 2013). In mature economies, even those ICT clusters generally acknowledged as success cases, such as Silicon Valley, are recently showing weaknesses in terms of social sustainability (Etzkowitz, 2013, Pellow and Park, 2002, Pique et al., 2018).

With these premises, we analyze the experience of Dongguan city, in the Guangdong Province of Southern China. This relatively small city – with a permanent population similar to that of Switzerland on an area no larger than Luxembourg2 – has witnessed an impressive growth in ICT production, becoming a world hub in this field in a matter of years (Wang and Lin, 2008, Zhou, 2013, Zhou et al., 2011). In 2016, one sixth of all the smartphones sold worldwide was manufactured in this city.3 The organization of ICT production and, in general, of the whole manufacturing in Dongguan, is structured around industrial clusters. Such social organizations of production have been officially recognized since the early 2000s within the framework of the Guangdong Province “Specialized Towns Program” (Barbieri et al., 2019, Bellandi and Di Tommaso, 2005, Di Tommaso et al., 2013, Lu, 2006), which is a specific example of how regional governments in China deeply affect local industrial dynamics (Cai and Sun, 2018, Ratigan, 2017, Zhang and Hu, 2014). Additionally, Dongguan’s industrial clusters have initially developed under the influence of exogenous forces. Since the beginning, the main source of capital has been FDI coming from neighboring areas that had an interest in this particular city as an export hub, given its locational advantages. Subsequent industrial growth has attracted abundant inflows of migrant populations from rural areas (Shen and Tsai, 2016, Yang, 2007, Yang and Liao, 2010).

All these aspects, namely Dongguan FDI-led growth, its policy-induced specialization and its productive focus on ICT, make this city a special case study to analyze the linkage between policies, high-tech specialization and sustainable development.

Some papers have analyzed Dongguan ICT through case studies or macroeconomic analyses (Lin et al., 2011, Sun and Zhou, 2011, Zhou, 2013, Zhou et al., 2011, only to cite some), whereas others have stressed social change dynamics occurring as a consequence of rapid industrialization in the area (see for example Ip, 2014, Lin, 2006; and Liu & Ye, 2015). However, as far as we know there is no comprehensive evaluation of the degree of innovation and social development that ICT clusters have achieved in Dongguan, promoted by the Specialized Towns (STs) program. With this paper, we test which distinctive social, economic and institutional features can enable ICT specialized clusters to promote innovation and social sustainability. To do this we have adopted a mixed-method approach, building on both qualitative information gathered through fieldworks and interviews, and quantitative data collected from an original township-level dataset (2001–2015). We empirically test the existence of two types of relations: between ICT specialization and innovative outputs of specialized townships and, subsequently, between ICT specialization and a number of tailored social development measures, including measurements of human development.

The paper is organized as follows: Section 2 reviews the mechanisms acknowledged by the literature that link ICT clustering and innovation, on the one hand, and ICT clustering and development, on the other, and includes the hypotheses; Section 3 describes the methodology; Section 4 provides a description of the institutional STs Program setting and frames the experience of Dongguan within it. Section 5 presents the empirical analysis and discusses the results. Section 6 concludes.

Section snippets

Clusters, ICT and innovation

Since Marshall’s seminal work of (1890), further contributions have suggested that territorial specialization and spatial proximity among firms increase innovative capability (Bell and Albu, 1999, Porter, 1999). This is mainly due to localized learning processes and inter-firm networking that facilitate the diffusion of knowledge (Baptista, 2000, Bell, 2005, Breschi and Malerba, 2005); knowledge externalities among firms (Baptista and Swann, 1998, Cappellin, 2009); and, co-location within the

Methodology

Given the plurality of actors involved and the complexity of the social and institutional framework that we wish to analyze, we have decided to adopt a mixed-method approach (Cairns, 2018, Goertz, 2017, Hesse-Biber and Johnson, 2015), by complementing a quantitative empirical analysis, with qualitative information gathered during an on-site investigation in Guangdong Province (July–September 2017).

To perform the empirical analysis, we built an original panel dataset on Dongguan townships from

Innovative institutional setting: the experience of specialized towns

Building on the results of our fieldwork and on the existing literature, we introduce a first thorough picture of the recent experience of Guangdong clusters.

Clusters in Guangdong seem to display a number of distinctive features compared to the experience of other industrial agglomerations in China (Barbieri et al., 2012, Bellandi and Di Tommaso, 2005, Christerson and Lever-Tracy, 1997, Di Tommaso et al., 2013, Lai et al., 2005, Wang and Yue, 2010 among the others).

The first important aspect is

Empirical analysis

In this section we wish to test the relationship between ICT certified specialization and innovative performances on the one hand and a number of indicators for social and human development on the other.

Final remarks

Our study represents the first attempt to jointly investigate the relationship between ICT clusters, innovation and socially sustainable development. By analyzing the experience and evolution of Dongguan towns, we provide some evidence on the specific features that enable ICT clusters to become places that promote technological innovation as well as increased social development. In particular, our findings, suggest that specializing in ICT can pay in terms of innovative performances, provided

Data statement

The research in this article did not generate any data or code and was based solely on documents in the public domain.

Declaration of Competing Interest

The authors declare that they have no known competing financial interests or personal relationships that could have appeared to influence the work reported in this paper

Acknowledgements

We would like to thank the editor and the two anonymous reviewers for the throughout comments. This research did not receive any specific grant from funding agencies in the public, commercial, or not-for-profit sectors.

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