The shaping of inter-regional industrial linkages by institutional and cultural division in China: Characteristics and differences

Mao Qiliang and Mao Xianzhuang

Economic Analysis and Policy, 2024, vol. 81, issue C, 1113-1132

Abstract: This paper contributes to distinguish different impact of institutional and cultural division on patterns of inter-regional linkages from the evidence of China. Institutional division hinders the inter-regional interactions mainly through the transaction costs mechanism, which leads to negative impact on both the horizontal and vertical linkages between regions. Cultural division hinders the industrial horizontal linkages between regions, but do not limit the formation of industrial vertical linkages. The cultural segmentation effect is mainly attributed to information mechanism. Regions with common culture have the comparative advantage of knowledge diffusion to form horizontal linkages. The expansion of industrial cooperation networks across regions needs to build up institutional trust rather than cultural proximity.

Keywords: Institutional division; Cultural division; Industrial linkages; Transaction costs; Knowledge diffusion (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:81:y:2024:i:c:p:1113-1132

DOI: 10.1016/j.eap.2024.02.007

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