Does policy always work in industrial branching? Evidence from Chinese photovoltaic manufacturing

Authors: Xiangdong Zhu*, , Canfei He, Peking University, David Rigby, Department of Geography, UCLA
Topics: Sustainability Science, Energy, Human-Environment Geography
Keywords: photovoltaic, institution, policy, relatedness, trade
Session Type: Paper
Day: 4/13/2018
Start / End Time: 5:20 PM / 7:00 PM
Room: Studio 10, Marriott, 2nd Floor
Presentation File: No File Uploaded


A growing literature in evolutionary economic geography suggests policy plays a crucial role in industrial branching. If this argument holds, industrial branching would happen everywhere as long as appropriate policies applied and there will be less enlargement between developing and developed regions. Thus, the role of policy in the emergence of new industries need to be further investigated. The rapid development of photovoltaic (PV) manufacturing under similar multi-layered policies in China provides a unique case to broaden the research. Based on export data this paper tries to explore pros and cons of industrial policy and its synergy effects with path dependence as well as external linkage. The results indicate homogeneous policies that are inconsistent with local assets result in a disjuncture between geographical expansion and output growth of PV manufacturing. Without technological relatedness and external linkages to PV activity, regions are less likely to branch into PV industry with incentives. Policy has both positive and negative effects, it is very helpful for the scaling up of specific industries on one hand and there would be diseconomy and waste of resources under inappropriate policy on the other. One key premise of improving policy efficiency is to take into account regional characteristics which includes but not limited to industrial structure and external linkage.

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