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| Ruan, Jianqing; Zhang, Xiaobo. |
| The traditional literature emphasizes the causal role of finance in promoting industrial growth. China’s rapid industrialization over the past several decades, which has occurred in the absence of well-functioning financial markets, seems to defy the conventional wisdom. By studying a cashmere sweater cluster in China, this paper argues that rural industrial clustering, as a new business model, lowers the entry barriers of initial capital investment through the division of labor. Within these clusters, enterprises can often acquire trade credits from upstream or downstream firms and obtain informal financing from friends and relatives, and use these funds to mitigate constraints of working capital. These findings help explain China’s rapid... |
| Tipo: Working or Discussion Paper |
Palavras-chave: Industrialization; Cluster; Finance; China; Growth; Financial Economics; International Development. |
| Ano: 2008 |
URL: http://purl.umn.edu/42322 |
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| Ruan, Jianqing; Zhang, Xiaobo. |
| Traditional economic theory posits that a well functioning capital market is a necessary condition for industrialization and economic growth. However, in reality it is observed that micro and small enterprises are ubiquitous because entrepreneurs can set up business in low-return activities with minimal barriers to entry. Using a cashmere sweater cluster in China as an example, this paper shows that organizational choice can overcome the prohibitive cost of investment. Facing credit constraints, firms are more likely to concentrate in divisible production technologies in the form of industrial clusters. With clusters, a vertically integrated production process can be decomposed into many small incremental stages, making them more accessible for small... |
| Tipo: Conference Paper or Presentation |
Palavras-chave: Cluster; Putting-out; Subcontract; Industrialization; Entrepreneurship; China; Industrial Organization; International Development. |
| Ano: 2009 |
URL: http://purl.umn.edu/50334 |
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| Ruan, Jianqing; Wei, Longbao; Zhang, Xiaobo. |
| Understanding how small enterprises overcome capital barriers is the key to understanding China's rapid development. The literature traditionally emphasizes the development of financial market to raise small amount of loan. By studying the division of labor in the cashmere sweater cluster in Puyuan and the cash flow in the course of daily operation, this paper, argues instead that industry clusters lower capital entry access through the division of labor; various entities in the cluster obtain the capital required for daily operation by taking advantage of individual social capital and endogenous capital in the cluster. |
| Tipo: Conference Paper or Presentation |
Palavras-chave: Industrial Organization. |
| Ano: 2006 |
URL: http://purl.umn.edu/25280 |
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