The Flowchart Approach to Industrial Cluster Policy
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1 The Flowchart Approach to Industrial Cluster Policy
2 Other books by IDE-JETRO INDUSTRIAL CLUSTERS IN ASIA Akifumi Kuchiki and Masatsugu Tsuji (editors) SPATIAL STRUCTURE AND REGIONAL DEVELOPMENT IN CHINA Nobuhiro Okamoto and Takeo Ihara (editors) GENDER AND DEVELOPMENT The Japanese Experience in Comparative Perspective Mayumi Murayama (editor) EAST ASIA'S DE FACTO ECONOMIC INTEGRATION Daisuke Hiratsuka (editor) RECOVERING FINANCIAL SYSTEMS China and Asian Transition Economies Mariko Watanabe (editor) DEVELOPMENT OF ENVIRONMENTAL POLICY IN JAPAN AND ASIAN COUNTRIES Tadayoshi Terao and Kenji Otsuka (editors) REGIONAL INTEGRATION IN EAST ASIA From the Viewpoint of Spatial Economics Masahisa Fujita (editor) NEW DEVELOPMENTS OF THE EXCHANGE RATE REGIMES IN DEVELOPING COUNTRIES Hisayuki Mitsuo (editor) ECONOMIC INTEGRATION IN ASIA AND INDIA Masahisa Fujita (editor)
3 The Flowchart Approach to Industrial Cluster Policy Edited by Akifumi Kuchiki and Masatsugu Tsuji palgrave macmillan ldejetro
4 * Institute of Developing Economies (IDE), JETRO 2008 Softcover reprint of the hardcover 1st edition All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No paragraph of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, 90 Tottenham Court Road, London wn 4LP. Any person who does any unauthorised act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The authors have asserted their rights to be identified as the authors of this work in accordance with the Copyright, Designs and Patents Act First published in 2008 by PALGRAVE MACMILLAN Houndmills, Basingstoke, Hampshire RG21 6XS and 175 Fifth Avenue, New York, N.Y Companies and representatives throughout the world. PALGRAVE MACMILLAN is the global academic imprint of the Palgrave Macmillan division of St. Martin's Press, LLC and of Palgrave Macmillan Ltd. Macmillan is a registered trademark in the United States, United Kingdom and other countries. Palgrave is a registered trademark in the European Union and other countries. ISBN DOI DOl / ISBN (ebook) This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. Logging, pulping and manufacturing processes are expected to conform to the environmental regulations of the country of origin. A catalogue record for this book is available from the British Library. A catalog record for this book is available from the Library of Congress Transferred to Digital Printing 2012.
5 Contents List of Illustrations List of Tables Preface List of Contributors vii ix xi xii Part I Theoretical Framework 1 Introduction Akifumi Kuchiki and Masatsugu Tsuji 2 Formation and Growth of Economic Agglomerations and Industrial Clusters: A Theoretical Framework from the Viewpoint of Spatial Economics Masahisa Fujita 3 18 Part II Case Studies 3 Flowchart Approach to Industrial Cluster Policy: Guangzhou's Automobile Industry Cluster Akifumi Kuchiki and Hiroyuki Tsukada 4 Industrial Clusters in the Austin Area: The Austin Technopolis Case Study Jobaid Kabir 5 Automobile Clusters in India: Evidence from Chennai and the National Capital Region Aya Okada and N. S. Siddharthan 6 The Process and Factors of Industrial Cluster Formation: A Flowchart Approach to Industrial Cluster Policy in Japan Kentaro Yoshida 7 An Empirical Examination of the Flowchart Approach to Industrial Clustering: Case Study of Greater Bangkok, Thailand Masatsugu Tsuji, Shoichi Miyahara, and Yasushi Ueki v
6 vi Contents 8 The Evolution of the High-Tech Electronics Cluster in Guadalajara, Mexico Yoshiaki Hisamatsu 9 Conclusion Masatsugu Tsuji and Akifumi Kuchiki Appendix: Theory of a Flowchart Approach to Industrial Cluster Policy Akifumi Kuchiki Index 313
7 List of Illustrations Figures 1.1 Flowchart approach to industrial cluster policy Flowchart approach: Step 1. agglomeration Flowchart approach to industrial cluster policy Three basic types of industrial agglomerations The basic framework of the new economic geography Generation of agglomeration forces Generation of endogenous agglomeration forces Circle of causality in spatial agglomeration of consumer-goods producers and workers Circle of causality in spatial agglomeration of final-good producers and producer-services Circle of causality in spatial agglomeration of innovation activity and brain-workers Non-monotonic impact of decreasing transport costs One-stop services Flowchart approach to industrial cluster policy in Guangzhou Honda's effect Dongfeng Nissan Diesel Motor Co Automobile industry cluster Guangzhou automobile industry Roles of Guangzhou municipality Group structure of Guangzhou automobile industry group Kuchiki's flowchart Flowchart for Austin technology cluster Trends in passenger car production in India by manufacturer Industrial cluster project map in Japan Development model of Japan's industrial clusters Flowchart model driven from the research Structure of the industrial agglomeration in the greater Bangkok, Thailand Electronics exports from Jalisco state Investment in electronics in Jalisco state Structure of the Guadalajara electronics cluster The role of the business association in Guadalajara 272 A.1 Definition of goods 290 vii
8 viii List of Illustrations A.2 The role of the private sector in market failures A.3 Importance of quasi-public goods AA An industrial cluster formed by an anchor firm Map 1 The three prominent clusters 114
9 List of Tables 1.1 Format of the analysis I Format of the analysis II: capacity building Format of the analysis III: related firms Contrasting the two theoretical frameworks Automobile industry cluster in Guangzhou Industrial zones and capacity building Honda's related companies in Guangzhou Nissan's related companies in Guangzhou Toyota's related companies in Guangzhou Guangzhou automobile industrial park Co. (GAIP) Guangzhou Automobile Group Component Co., Ltd Guangzhou State-Owned Enterprise project List of key auto firms located in Chennai cluster Geographic distribution of MUL's first-tier suppliers Group mean and standard deviation of the four groups 133 5A Logit model results: maximum likelihood estimates of inter-cluster differences 13S 5.5 Logit model results: maximum likelihood estimates cluster and non-cluster differences Industrial manufacturing statistics Use of resources Existence of industrial clusters Factors for industrial clustering Effective government policy Role of cooperative promotion agencies Advantages of industrial clusters Future plans for forming industrial clusters Number of questionnaires dispatched and number of valid respondents to the questionnaire Number of respondents by year of business foundation Number of respondents by generation of the present CEO Number of respondents by capital amount Number of respondents by sales for the year Number of respondents by number of total employees Number of respondents by business field Number of respondents by manufactured product Year of establishment of Bangkok operations Corporate form of the Bangkok operations 205 ix
10 x List of Tables 7.11 Function(s) carried out in Bangkok Importance of the factors as the reasons for establishing operations in Bangkok Current importance of factors in respondents' decision to continue/expand their Bangkok operations Current satisfaction with factors in respondents' decision to continue/expand their Bangkok operations Existence of problems regarding businesses in Bangkok Existence of problems regarding businesses in Bangkok Future prospects for continuing businesses in Bangkok Intention to increase investments in Bangkok Reasons for no future prospects for continuing businesses in Bangkok Existence of plans to start new operations in countries other than in Thailand The most important policies requested The most important policies requested Year of establishment in Bangkok Indication of industrial agglomeration Summary statistics Binomial probit model results Result for multinomial probit model Marginal effects in multinomial probit model Result for multinomial probit model Marginal effects in multinomial probit model Result for multinomial probit model Marginal effects in multinomial probit model Result for multinomial probit model Marginal effects in multinomial probit model Summary of estimates of probit models Major companies in the Guadalajara electronics cluster 264 A.1 Export processing zones as quasi-public goods 293 A.2 Industrial cluster in Shanghai 298 A.3 Industrial cluster in Guangzhou 299
11 Preface This volume is the product of the research project entitled "Flowchart Approach to Industrial Cluster Policy" which was coordinated and financially supported by the Institute of Developing Economies (IDE), Japan External Trade Organization (JETRO). Policy for forming an industrial cluster, or industrial cluster policy, plays an important role in developing a region in East Asia. Industrial cluster policy is followed not only in Japan by the Ministry of International Trade and Industry or the Ministry of Economy, Trade and Industry, but also in most countries in East Asia such as Malaysia and Singapore. Silicon Valley in the United States and Bangalore in India are well-known success stories of development in information technology. Theories of agglomeration and cluster explain that industrial clusters are effective ways in generating external economies and reducing transportation costs in regions as well as whole economies. But it is necessary to clarify what conditions are required for built industrial clusters particularly in developing countries as strategies for economic growth. The purpose of this book is to present a framework to analyze industrial cluster policies, which is based on the Flowchart Approach initiated by our previous work, Industrial Clusters in Asia: Analyses of their Competition and Cooperation [edited A. Kuchiki and M. Tsuji, Palgrave Macmillan, December 200S]. The Flowchart Approach makes it clear what factors are crucial in building industrial clusters, describes how it agglomerates firms, and prioritizes policy measures. I am grateful to all the members and counterparts who contributed to the project. I also thank all the individuals and organizations that accepted our visits and shared with us their precious time and information. Any opinions expressed in this book are contributors' but not their organizations'. We hope this publication will contribute to academia and toward further understanding of the Flowchart Approach as a practical method. AKIFUMI KUCHIKI Executive Vice President Japan Trade External Organization xi
12 List of Contributors Akifumi Kuchiki Aya Okada Hiroyuki Tsukada Masahisa Fujita Masatsugu Tsuji Shoichi Miyahara Executive Vice President, Japan External Trade Organization (JETRO). Professor, Graduate School of International Development, Nagoya University. Director General, Guangzhou, China, Japan External Trade Organization (JETRO). Professor, Konan University and Professor Emeritus, Kyoto University. Professor, Graduate School of Applied Informatics, University of Hyogo, and Professor Emeritus, Osaka University. Associate Professor, College of Economics, Aoyama Gakuin University. Yasushi Ueki Research Fellow, Development Studies Center, Institute of Developing Economies, JETRO (IDEI JETRO). Yoshiaki Hisamatsu Associate Professor, Faculty of Regional Development Studies, Toyo University. Jobaid Kabir Kentaro Yoshida N.S. Siddharthan Manager, Environmental Compliance, Lower Colorado River Authority. JETRO, and Visiting Research Fellow, Center for Strategic & International Studies (Washington, DC). Honorary Professor, Madras School of Economics. xii
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