قرار دادن مزیت منطقه ای در اقتصاد سیاسی جغرافیایی: انتقال شرکت های دولتی در گوانگژو، چین

Drawing upon insights from geographical political economy, this study examines the causal processes and mechanisms that underlined the growth and adaptation of state-owned enterprises in mechanical and electrical sectors (SOMEEs) in a leading Chinese city since market reforms. It reveals that the geographically specific and historically contingent political economy in which SOMEEs in Guangzhou were situated before economic reforms was the fundamental force underlying their successful adaptation in the post-reform period. SOMEEs in Guangzhou prior to market reforms were placed in a geographical political economy characterized by a special market orientation toward the production of low-end machinery for local needs and a loosely-coupled political linkage with the state apparatus. While such place-specific market and institutional relations were not favorable to the growth and survival of SOMEEs in Guangzhou in the Mao era, they have constituted an important source of regional advantage to enforce both market competitive pressure and hardened budget constraints on SOMEEs in Guangzhou and propel them to adopt efficient market-adaptation strategies and practices during the post-reform period. There is a need for ‘scaling up’ the theorization of regional advantage to go beyond the exclusive emphasis placed on the institutional dynamics endogenous to regional economies and take more seriously the unequal positions of regions within the extra-local structural relations of actually existing political-economic regimes. The paper advocates a place-contingent treatment of soft budget constraints in future studies on state-owned enterprises in China and other transitional economies.

Economic geography over the last two decades has witnessed a resurgence of academic and policy interests in the region as a site for constructing competitive advantage in an increasingly globalizing economy. In addition to the earlier interests in localized input–output relations and material linkages in regional agglomeration and new industrial spaces, a more sophisticated theoretical formulation of “new regionalism” and “new economic geography” has shifted the attention of researchers and policy-makers towards a broad concern with the significance of certain non-economic factors such as social capital, trust and reciprocity, shared know-how, spillover expertise, cooperation, embedded routines, habits and norms, local conventions of communication and interaction and so on (Putnam, 1993, Saxenian, 1994, Amin and Thrift, 1995, Florida, 1995, Malmberg, 1996, Storper, 1997, Amin, 1999 and Cooke and Morgan, 1998). These soft externalities, known as ‘relational assets’ or ‘untraded interdependencies’ to some and ‘institutional thickness’ or ‘innovative milieu’ to others, are believed to be localized, place-bounded, culturally rooted, socially embedded and spatially sticky conditions, which serve to reduce uncertainty among local economic actors, facilitate collective learning and knowledge creation and improve regional economic competitiveness (Camagni, 1991, Amin and Thrift, 1994, Asheim, 1996 and Storper, 1997). While the new regionalism literature focused on dense local production and social networks as the major source of a region’s competitive advantage in the era of globalization, the recently emerged theoretical project of “evolutionary economic geography” has provided a different interpretation by highlighting the negative aspect of embedded local milieu that might ultimately lead to a petrification of routines and institutional conventions and prevent regional economies from successful adjustment to emerging new economic environments (Grabher, 1993, Hudson, 1994, Hassink, 2005, Martin and Sunley, 2006, Boschma and Martin, 2007, Essletzbichler and Rigby, 2007 and Frenken and Boschma, 2007). Building upon the twin related concepts of path dependence and lock-in, the evolutionary literature has emphasized the importance of historically inherited habits, norms, cultures and practices in shaping the complex and diverse processes of regional evolution and adaptation (MacKinnon et al., 2002 and Chapman et al., 2004). Its basic premise is that the capacities of regional actors and institutions to shape their own pathways in light of changing economic conditions are affected by the strength of locally induced lock-ins, as strong lock-in leads to unsuccessful renewal and weak lock-in contributes to relatively successful renewal (Hassink, 2007 and Cho and Hassink, 2009). Although the theses of new regionalism and evolutionary economic geography have provided a different interpretation of the nature and dynamics of regional growth and evolution, they have shared similar analytical and theoretical limitations. They are both based on the neoliberal assumption that all regions can be successful in a ‘win–win’ world of bottom-up endogenous regional growth. Little attention has been paid to the power and politics underlying regional autonomy and proactivity and the effects of wider processes of uneven development that are structurally embedded within and genetically encoded into the capitalist mode of production (Cumbers et al., 2003, Hudson, 2005, Hudson, 2007 and Hadjimichalis, 2006). While highly influential in focusing attention on regional action, these two streams of literature have probably moved too far to over-emphasize the endogenous capacity of regions to adapt to changing conditions at the expense of links to other scales of regulation, particularly in terms of how regional adaptation and development is facilitated or hindered by the national macro-regulatory regime (MacLeod, 2001a, Cumbers et al., 2003, Hudson, 2005 and Birch et al., 2010). Moreover, the existing regional development research is predominantly based on the growth experiences of private enterprises in competitive market economies which are characterized by relatively harder budget constraints1 and have built-in incentives to adapt to market signals in order to remain survival and growth. As such, the theoretical formulation in both new regionalism and evolutionary economic geography has tended to privilege regional competitive advantages in terms of technological skills, labor costs, capital availability and policy preferences and overlook other sources of regional growth and adaptation such as demand-side budget constraints which are a defining institutional factor for understanding the nature and trajectory of evolution in many socialist transitional economies. Building upon the geographical political economy approach which combines sensitivity to institutional differences and spatial–temporal contexts with a stronger appreciation of structural constraints related to regional uneven development (Smith et al., 2002, Cumbers et al., 2003, Goodwin, 2004, Hadjimichalis, 2006, Hudson, 2005, Hudson, 2006, Jones, 2008, Grabher, 2009, MacKinnon et al., 2009 and Pike et al., 2009), this paper investigates the political origins of regional advantage in market adaptation that lies beyond the social and economic aspects already highlighted in the existing literature. The empirical case is based on the examination of state-owned enterprises (SOEs hereafter) in Guangzhou—a leading metropolis in southern China—in the post-reform era when the institutional environment changes from plan to market. Our research identifies an intriguing pattern and process whereby SOEs in Guangzhou appeared to be more capable of adapting to the emerging market economy in the post-reform period than their counterparts in other regions. Further analysis has revealed that the successful adaptation of SOEs in post-reform Guangzhou has owed a great deal to their historically contingent and geographically specific political economy in the previous Maoist redistributive regime that assigned them to a disadvantageous position in plan coverage and weakened their functional and institutional affinity with state strategy. Such a politically-inflected, loosely coupled relationship with the state apparatus has ironically constituted an important source of regional advantages in the post-Mao era that enforced both market competitive pressure and hardened budget constraints on state-owned mechanical and electrical enterprises (SOMEEs hereafter) in Guangzhou and propelled them to adopt efficient market-adaptation strategies and practices. This study advocates a place-specific treatment of the institutional constraints hardening the operational budget of economic actors in socialist transitional economies. This paper is organized into five parts. It begins with a critical evaluation of the existing literature on new regionalism and evolutionary economic geography. A critique of the theory leads to the identification of several research questions and a methodological framework to address these questions. The third part examines the geographical political economy confronting SOMEEs in Guangzhou in the Maoist era and its impact on their specific market orientation and political connection. Attention is then turned to a detailed investigation of the causal relationship between such place-specific and historical-contingent market and institutional features and the adaptation strategies and practices of SOMEEs in Guangzhou during the post-reform period. The final part of the paper highlights important findings of the study and their major theoretical implications. 2. Reconnecting with geographical political economy in regional development research Over the past two decades, the main research agenda within economic geography has developed around rediscovering ‘the region’ as an important source of competitive advantage underlying knowledge creation, learning and adaptation of business firms in an age of volatile globalization (Saxenian, 1994, Amin and Cohendet, 1999 and Gertler, 2003). Building on an earlier interest in agglomeration economies and ‘traded’ input–output linkages, economic geographers have broadened their analysis of regional advantages to encompass untraded socio-cultural, institutional and relational characteristics of regional industrial agglomerations (MacKinnon et al., 2002). Under the rubric of new regionalism, these localized externalities, conceptualized as regional culture, conventions or social capital, constitute regional relational assets sustaining the productive, innovative and learning capacity of industrial firms located therein (Putnam, 1993, Saxenian, 1994 and Storper, 1997). In recent years, there has been a noticeable shift of emphasis from the incremental processes of innovation and learning within established industrial clusters and regional production systems towards the issues of adaptation and renewal in terms of how regions can sustain growth in the face of rapid technological and market changes (MacKinnon et al., 2002, Chapman et al., 2004, Schamp, 2005, Hassink, 2007 and Cho and Hassink, 2009). It has been increasingly recognized that some of the key mechanisms of growth within successful industrial districts are inherently self-limiting in the medium-to-long term and there have been enough cases of regional economies that were once prosperous and dynamic but have since gone into relative or even absolute decline (Grabher, 1993, Hudson, 1994, Scott, 1998 and Whitford, 2001). Economic geographers have shown an increasing interest in evolutionary regional economy in general and the concepts of path dependence and lock-in in particular which takes history and geography seriously by recognizing the importance of place-specific elements and processes to explain broader spatial patterns of economic evolution (Martin and Sunley, 2006, Boschma and Martin, 2007, Essletzbichler and Rigby, 2007 and Frenken and Boschma, 2007). Although the literature of new regionalism and evolutionary economic geography have both shed important light over the nature and dynamics of regional adaptation in a competitive market economy, it remains questionable to what extent the existing conceptualizations of regional advantage can give an adequate account of the complex nature and causal mechanisms of regional economic change in different political-geographical contexts. The discourses of new regionalism and evolutionary economic geography are based upon a neoliberal development agenda which emphasizes the promotion of local capacities and frames the issue of regional adaptation and development in terms of endogenous factors. While broadening our vision to the institutional and social dynamics of regional development, such conceptualization has a tendency to perpetuate a depoliticized and instrumentalist view of non-economic factors which confuses the roles of local institutions with their origins, and thereby has a danger of drifting towards soft institutionalism (MacLeod, 2001b, Hadjimichalis, 2006 and Moulaert and Mehmood, 2009). As such, locally-specific socio-cultural and institutional practices are often naturalized as the adequate explanation of regionally differentiated growth, although they themselves are part of the explanandum that also need to be explained (MacLeod, 2001b). The extant model of regional development is more specific about the effects of institutional conventions and regional lock-ins than it is about their sources or origins (Gertler, 1997 and Hassink and Shin, 2005). It remains unclear how local institutional thickness or lock-ins have come into being in the first place. Secondly, the theses of new regionalism and regional lock-in are preoccupied with ‘thin political economy’ and pay little attention to the intricate connection between regionally advantageous conditions and the functional and spatial restructuring of the state (MacLeod, 2001a and MacLeod, 2001b). The existing theoretical model of regional development is grounded in micro-scale processes and the evolutionary mechanism of self-organization, in which the growth and evolution of regional institutions and economic landscapes emerge from the complex interactions between economic agents and are reproduced through the evolutionary processes of variation, heredity and selection (Martin and Sunley, 2006, Boschma and Martin, 2007, Essletzbichler and Rigby, 2007 and Frenken and Boschma, 2007). However, the mechanisms through which the microfoundations of regional economic change are embedded in macrostructures and relations have not been clearly elucidated. Thirdly, the existing theorizations in new regionalism and institutional lock-in has shown a noticeable bias toward those regions in competitive market economies populated by private enterprises, which have strong pressure to use available resources and investments toward their most productive uses in order to maintain survival and growth in the face of strong constraints from market competition. The basic assumption is that regional economic actors have built-in economic incentives to adapt to external market signals. Attention is thus focused on regional differentiations in supply-side factors in terms of material conditions and institutional architecture that provide incentives for industrial firms located therein to adjust their production systems. By contrast, very little has been said about how demand-side budget constraints may also affect the strategies and trajectories of regional growth and adaptation. This neglect may not be too problematic for regional economies in the West where the dominant economic actors are characterized by private ownership forms and hard budget constraints. It would become problematic when the theory is applied to transitional socialist economies, where SOEs, often characterized by weak incentives and agency problems,2 are still playing a significant role in regional socio-economic development. As Gertler (2001) has correctly pointed out, “it is probably more reasonable to assume that [these] firms depart from the status quo only when they perceive some kind of crisis or major threat to their competitive position” (italics added, p. 8). Against such a theoretical backdrop, there is a need to broaden the search for the sources and origins of regional adaptation and development. A promising agenda has connected institutional and evolutionary approaches with a reworked, contextually sensitive geographical political economy (GPE) (Martin and Sunley, 2001, Cumbers et al., 2003, Goodwin, 2004, Jones, 2008, Grabher, 2009, MacKinnon et al., 2009 and Pike et al., 2009). The GPE is a theoretical project that aims to integrate the study of institutions with the insights provided by the political economy of uneven development, in particular the geographical foundations of incessant capital accumulation and the structural mechanisms of regional inequality in “variegated capitalism” (Harvey, 1982, Smith, 1984, Smith et al., 2002, Peck and Theodore, 2007, Grabher, 2009 and MacKinnon et al., 2009). In contrast to the prevalent theories of new regionalism and regional lock-in in which locally embedded, spatially differentiated social-cultural practices and institutional relations are considered the key causal factors to successful regional adaptation, the GPE perspective argues that such regionally differentiated institutions were themselves the outcome of historical interactive processes between regional characteristics (infrastructure, natural resources, knowledge and skill and built environment etc.) and the wider structure of territorial divisions of labor. In such processes of interaction, socio-economic actors in certain places tended to be privileged over those in other places, as a result of the locational preferences of volatile capital investments or the strategic and spatial selectivity of the state (Jessop, 1990 and Jones, 1997). In this sense, the differentiation of regional institutions is not only the result of regional heterogeneity and diversity in resources, competencies and assets, but also reflective of the unequal positions of particular regions and their constituent economic activities and firms in relation to other regions within a specific nation-state regime (Smith et al., 2002). As a result, socio-economic actors in different regions became tied to different positionalities and assumed different roles within an historically-specific national political economy, which in turn, in different ways and varying extent, impinged upon their actions and incentives to engage with new political and economic circumstances.3 According to the GPE perspective, what matters for successful regional adaptation is not simply the presence of close-knit regional relational assets or loosely-coupled weak local ties per se, but rather the political-economic processes through which such local institutional relations were historically and spatially constituted and articulated. In this sense, there is a need for ‘scaling up’ (c.f. Lin, 2009) in the theorization of regional advantage to understand it as a spatial–temporal concept that is historically embedded in the strategic coupling process between regional characteristics and a national regulatory regime. The ongoing phenomenal transformation of SOEs in China has presented an important real-world opportunity to advance theoretical enquiries into the sophisticated mechanisms of regional growth in different geopolitical economies. It is illustrated in the remaining part of this paper with a case study of SOEs in Guangzhou municipality in southern China.

Drawing upon the theoretical proposition of geographical political economy (Martin and Sunley, 2001, Cumbers et al., 2003, Goodwin, 2004, Jones, 2008, Grabher, 2009, MacKinnon et al., 2009 and Pike et al., 2009), this study examines the nature and dynamics of regional advantage in a different political, economic and organizational context that goes beyond the arena so far occupied by the prevailing literature on new regionalism and regional lock-in. Based on a detailed examination of causal processes and mechanisms underlying the growth and adaptation of SOMEEs in post-reform Guangzhou, this study reveals that what really matters for their more successful adaptation in the post-reform period is not simply relational assets or institutional lock-in as suggested by the extant theoretical model, but more fundamentally is the geographically specific and historically contingent political economy that they were situated in before reforms. In particular, the specific resource and geographical conditions characterizing SOMEEs in Guangzhou had placed them in a disadvantageous position psychologically alienated, functionally disarticulated and institutionally separated from the strategic imperatives of central planners. Situated in such a geographical political economy, SOMEEs in Guangzhou were obligated to embark on a path of self-sustaining growth characterized by specific market orientation toward the production of low-end machinery for local needs and loosely coupled political linkages with the state apparatus. While such place-specific market and institutional relations were not favorable to the growth and survival of SOMEEs in Guangzhou under the Maoist redistributive regime, they had nevertheless constituted an important source of regional advantage that enforced both market competitive pressure and hardened budget constraints on SOMEEs in Guangzhou and propelled them to adopt performance-enhancing market-adaptation strategies and practices in the post-reform era. The case study highlights the need to pay more attention to the extra-local structural relations of actually existing political-economic regimes in the efforts to theorize regional advantage. The outcome of the analysis echoes the recent on-going call for decentering knowledge production and ‘provincializing’ the specificity of the putatively universal ‘Western’ theoretical concepts (Pollard and Samers, 2007, Horschelmann et al., 2008 and Pollard et al., 2009). It suggests that the theoretical proposition of geographical political economy does provide us with a new perspective to make sense of the complex nature of regional economic change in a transitional socialist economy. However, the core issue related to the success or failure of the growth and adaptation of SOEs in the Chinese context is not the hypothesized incentive effect of a region as the site of ‘supply architecture’ that is widely accepted in mainstream economic geography, but instead regionally specific institutional constraints hardening the operational budget of SOEs. It shows that caution must be exercised when the influential economic-geographical theories situated in the Anglo-American context are applied to the experiences and development in ‘other worlds’ such as China (Yeung and Lin, 2003). This study has important implications for the existing studies on the growth dynamics of SOEs in China and other transitional economies. In the voluminous literature on the organizational and institutional features of former socialist economies, the concept of a soft budget constraint has occupied such a center stage that it is commonly invoked as a crucial ingredient for explaining the economic inefficiency of SOEs. Given its prevalence and tenacity in socialist and transitional economies, specialists on China and other transitional economies even argued that “it is not only market economies that have an ‘invisible hand’: the economies of state socialism, too, have self-reproducing institutional mechanisms” (Nee and Stark, 1989, p. 11). However, empirical analysis in this paper suggests that the framework of a soft budget constraint is not in itself adequate to provide a sensible account of the growth and transformation of SOMEEs in Guangzhou, as their budget constraints were hardened by the coupling process between localized capabilities and central state strategy under the Maoist era. In this sense, this study implies that the framework of a soft budget constraint should also pay sufficient attention to local contextual conditions affecting the formation and transformation of a soft budget constraint syndrome among SOEs. In other words, while soft budget constraints matter for the growth dynamics of SOEs, it matters in different ways in different places.