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The Fight for the Middle: Upgrading, Competition, and Industrial Development in China

Loren Brandt () and Eric Thun

Working Papers from University of Toronto, Department of Economics

Abstract: When China acceded to WTO in 2001, there were fears that Chinese firms would lose market share in key sectors to foreign-invested enterprises (FIEs). Although aggregate data often indicate a shift in favour of FIEs, indigenous firms in many cases have slowly increased market share and deepened their technical capabilities. Through an analysis of aggregate data and three sectors, we show how the dynamics of competition between Chinese and FIEs in China's domestic market enhance the upgrading prospects for Chinese firms. China represents a new model of development in several important respects: industrial upgrading efforts are often domestically-driven, within this domestic market there is intense competition between both domestic and foreign firms, and this competition is driving and stimulating the upgrading efforts of domestic firms.

Keywords: China; industrialization; FDI; upgrading; value-chains; emerging markets; automotive (search for similar items in EconPapers)
JEL-codes: L1 L6 (search for similar items in EconPapers)
Pages: 69 pages
Date: 2010-03-16
New Economics Papers: this item is included in nep-tra
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Journal Article: The Fight for the Middle: Upgrading, Competition, and Industrial Development in China (2010) Downloads
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