Industrial clusters and regional economic development in China: the case of Heilongjiang Province

The concept of the ‘industrial cluster was first discussed in the early works of Alfred Marshall. In the 1990’s the term became part of mainstream economic thinking largely due to the work of Krugman in the area of New Economic Geography. There have been numerous studies into the theoretical and empirical nature of industrial clusters in the past twenty years as well as numerous examples of industrial cluster policy implementation. In China the concept was also adopted in policy in a number of Provinces. One of these, Heilongjiang, began to implement industrial cluster policies for the green food and pharmaceutical industries in 2003. This study investigates the resulting outcomes of these policies. In particular it examines the concept of the industrial cluster, how this is defined in both Western and Chinese academic studies and the specific implementation plans used for both industries in Heilongjiang. The research methods employed include interviews with key participants and official data from both national Government sources and Provincial sources. The central argument of the Thesis is that there exists key elements that must be present for an industrial cluster to exist (or to be developing) and that most of these are measurable. A set of theoretical propositions are presented and examined via a number of techniques including location quotient calculations, shift-share analysis, correlation analysis, regression analysis and careful analysis of descriptive data. The Thesis concludes that there is no doubt the green food industry in the Province is a strong but developing cluster and policy has positively encouraged this. However the same cannot be concluded in the case of the pharmaceutical industry. It is also suggested that cluster theory (Western and Chinese) continues to be rather vague in a number of fundamentals and requires some rethinking to more explicitly incorporate the role of business culture and of policy itself in our understanding of the formation of industrial clusters