Globalisation, institutions and the development of textile and clothing clusters in China - the case of Zhejiang Province

Since the mid-1990s, the textile and clothing clusters of the Yangtze River Delta (consisting of Shanghai City, Zhejiang Province and Jiangsu Province, East China) have developed to such an extent that only five years after joining the World Trade Organisation at the end of 2001, China has now become the largest producer and exporter of textile and clothing products in the world. The objective of this research is to explore the relationship between the complicated interactive process of institutional change and the development of industrial clusters in China. It focuses on the distinctive institutional factors that have allowed the textile and clothing clusters in China to benefit from globalisation while those in other transitional economies have not done so. The research also aims to make a thorough investigation into how the dynamic change of the public-private interface has influenced the development and upgrading of the textile and clothing clusters in contemporary China-in-transition, with all the political and social implications that the process entails. The research mainly uses the New Institutional Economics Approach (NIE) and gives weight to institutional change through multiple case studies of textile and clothing clusters in Zhejiang province, East China. The micro case studies are effective in illustrating the interaction between institutional change and industrial development. My empirical research in Ningbo clothing cluster, Shaoxing synthetic fibre cluster, Yiwu stocking cluster in Zhejiang Province, China, demonstrates that the reaction to the globalization challenge may differ greatly even among industrial clusters specialized in the same industrial sector. No common and unidirectional development pattern has proved valid any more, and different paths have been followed to face the new competitive challenges posed by the global institutional change. Moreover, the scope and variety of inter-firm alliances are continuously expanding, in relation to the increasing internationalization of economic and innovative activities. The research has also shown that local state corporatism alone cannot explain the great success of textile and clothing clusters in China. The development and upgrading of textile and clothing clusters in China have witnessed the extraordinary institutional change through the co-evolution between the public sector and the private sector, which can be reflected through the interaction among social network, entrepreneurship and performance of local government. The dynamic change of public-private interface is one unique endogenous institutional arrangement embedded in the economic system in China. It is a dynamic process of institutional embeddedness, deembeddedness and reembeddedness with a diversity of economic regimes coexisting at different hierarchies of government