Lock-in and New Path Development of China Commodity City: The Role of Policies

Abstract

China Commodity City (Yiwu) has evolved from a poor, isolated region into one of the world largest mass-producers of low-tech products. This study applies the concept of path dependence in order to trace Yiwu's industrial development trajectory. It zooms in on factors leading towards lock in, path extension and path creation. The study identifies multiple factors leading towards a lock-in and possible path decay. At the same time, related diversification and industrial policies such as the China Belt and Road Initiative enable path extension. New path creation is however less likely in the nearby future. While China moves towards a knowledge economy, innovation policies in Yiwu have not yet been successful, as they don't specifically target low-tech family firms, implementation capacity is limited, instruments are not well targeted and institutional incentives are diffuse. To create an alternative innovation-driven industrial pathway, the study recommends landscape pressure and multilevel experimentation.

Conclusions: new insights in urban planning, management and governance in emerging economies

“…Attracting and retaining a diverse labour force furthermore requires attractive regions. A homogeneous skill set and technology level and low labour mobility may lead to a lock-in, while diverse skill sets, technologies, migration and FDI may open new growth pathways (Eriksson, 2011;Fransen, 2020). Van Oort et al subsequent reframe the competitiveness challenge in emerging economies as a regional institutional challenge: according to the scholars, informal work, lack of basic infrastructure, poor quality education and weak legislation may hamper the development of knowledge-intensive and diverse labour markets.…”

“…The vision is broadly described because it is unknown what a post-carbon society looks like. Scholars indicate that urban systems or regimes, such as the transport system or labour markets are path dependent and hard to change (Fransen, 2020). The objective of transition management is therefore to destabilize current thinking within regimes through the proactive governance of change.…”