Overcoming successive bottlenecks: The evolution of a potato cluster in China

Abstract

Although the role of industrial policy in economic development is a frequent topic of debate in both the literature and the political arena, most such discussions focus on industrial policymaking at the national level. Using a case study of a potato cluster in China, we show that industrial policymaking at the local level contributes greatly to economic development. Many of the industrial policies affecting the cluster—including leveling land, developing better varieties, establishing a potato trade association, lobbying for increasing freight car quotas, and attracting processing firms—were implemented at the local level, highlighting the need for discussion of local industrial policymaking as a major determinant of cluster development. As the case study demonstrates, economic development is a continuous process with constantly evolving binding supply-side and demand-side constraints. Often, after a local policy helps remove one binding constraint, a new one emerges that, in turn, may require a new set of local policies. Therefore, the success of a potato cluster depends upon local industrial policies that respond to emerging binding constraints at different stages of the cluster's development.Economic transformation, clusters, comparative advantage, local industrial policy, Poverty,