Global production networks and local institutional building: the development of the information technology industry in Suzhou

Abstract

We discuss how global production networks interact with local institutions to shape the\r\nways in which economic development occurs within a region; the region concerned being the Suzhou\r\nmunicipality in China. We argue that the development of Suzhou`s information-technology industry\r\nhas largely resulted from (1) the transformation of global production networks in the 1990s, in which\r\nTaiwanese firms played an important role; (2) the local states` active role in transforming local\r\ninstitutions to fit the needs of foreign firms; and (3) Taiwanese investors` engagement in mediating\r\nand transplanting related institutions into the locality to meet the demand of global logistics for speed and\r\nflexibility. All these have resulted in Suzhou municipality`s rapid growth in the information-technology\r\nindustry and its embeddedness in the fusion of the global and local contexts. However, we will also\r\ndemonstrate that the power asymmetry of global players and local states in this area has resulted in the\r\ncreation of industrial clusters that are institutionally embedded but technologically delinked from\r\nthe localities.