Wenzhou Model Of Social Capital Perspective And Development Transformation

This paper tries to absorb the most recent research fruits of the field of social capital theory, developmental economics and New Institutional Economics, especially of Comparative Institutional Analysis (CIA), and aims to give a theoretical framework between social capital and developmental transition, with a research interest to apply this theoretical framework to the formation, development and evolution of Wenzhou Model.This paper introduces the Spatial Prisoner's Dilemma Model under a"Small World Network", and applies this model to the analysis of the governance structure of Wenzhou model based on the traditional social capital accumulated during Wenzhou history. Further analysis is given to those domestic institutional innovations conducted during the 30 years development of Wenzhou, as well as to those main aspects of Wenzhou development process. Focused on the transition from the traditional type of social capital to modern type of that, the paper clarifies the openness of the Wenzhou"Small World Network". Based on the above analysis, the paper points out that only the formation of a modern kind of economic reason, which support a continuous impulse for business activity, could promote the Wenzhou"Small World Network"open to the outside market opportunities in a continuous way, thus the domestic trading rules will undergo a rationalization process in order to merge with the outside trading rules which brought bigger trading margins. Such a process will produce a modern kind of social capital and maintain the competitive advantage of the governance structure of Wenzhou"Small World Network"in an open market environment, thus promote the transition of Wenzhou Model to a modern type.In the first chapter, this paper reviews the researches in the field of social capital theory, developmental economics and New Institutional Economics, especially of Comparative Institutional Analysis (CIA), and gives a theoretical framework between social capital and developmental transition. In the second chapter, this paper mainly analyzes the economic reason of Wenzhou people through the economic history of Wenzhou, and the group cognition of Wenzhou people formed during their history of immigration and village communities, and the embryonic form of Wenzhou"Small World Network"formed during their emigration history in the last century. Above is the analysis to the traditional social capital of Wenzhou.In the third chapter, combining the analysis with governance structure of Grief and Aoki and relevant Institutional researches, this paper compares the western and Japanese experience, and then introduces the Spatial Prisoner's Dilemma under a"Small World Network"to analyze Wenzhou case. The paper proves that traditional social capital accumulated during Wenzhou history formed a kind of governance mechanism as a"Small World Network", which provides the possibility to apply a group strategy as Grief analyzed in Maghribi traders and thus give higher proficiency as compared with that under pure market mechanism.In the forth chapter, this paper proves the existence and development of a pan-group mechanism as a"Small World Network", through the historic facts in the development of Wenzhou economy, and further discuss the openness of the Wenzhou"Small World Network". Based on the above analysis, the paper analyzes the function of the pan-group mechanism in important institutional innovations during the development of Wenzhou Economy.In the fifth chapter, this paper applies the pan-group mechanism as"Small World Network"of Wenzhou, to analyze some important aspects of Wenzhou economy, such as the leading maketization of Wenzhou region and its market expansion, and the overcoming of obstacles during industrialization, the clustering of industries in its manufacturing sectors, and the function of pan-family ethic during the growing process of companies. The paper further points out that the resurging of the Family Ethic and domestic beliefs, all kinds of Go- between Organization as well as charity behaviors of companies in Wenzhou Region are not separated facts to economic developments, but the reproduce and renovation of traditional social capital.In the sixth chapter, this paper analyzes the openness of the Wenzhou "Small World Network"to the outsider market opportunity, and points out the condition of social capital for the merging with outsider market, and claries the further evolution process of Wenzhou Model.