Innovation And Diffusion:The Rise And Establishment Of HIDZs In Prefecture-level Cities In China

As an important policy instrument to increase employment,attract foreign investment,encourage technological innovation and facilitate economic growth,multiple types of economic development zones(EDZs)have been set up in urban areas by Chinese government since 1980 s.EDZs,in particular of high and new tech development zones(HIDZs),significantly contribute to the renaissance of Chinese economy in the thirty years since the reform and opening up.Staring from the Torch program(huo ju ji hua)initiated by Ministry of Science and Technology in 1988,HIDZs have been progressively built in 193 cities by 2014.However,how does such a large-scale establishment and diffusion process of HIDZs happen in local governments? What are the factors or mechanisms underlying the establishment of HIDZs in prefecture-level cities? This paper endeavors to uncover the whole picture of the development of HIDZs in China based on innovation diffusion theory.Borrowing insights from existing diffusion theories developed by Scholars from different background,this research explores the determinants of the policy innovationdecisions by utilizing three theoretical models:(1)The internal determinants model,which presumes that the f actors causing a local state to adopt a new policy are political,economic,a nd social characteristics of the local states.(2)The spatial diffusion mode l,which posits that the geographical proximity affects diffusion by encour aging emulationand competition among neighboring states.(3)Institution al isomorphism model,whichproposes that a new policy may be adopted t o prove the legitimacy of the organization,to cope with environment unce rtainties by modeling others,to conform to the will ofother organizations on which the adopters depend.Using prefecture-level data in 284 cities in China spanning the period1988-2014,this paper use Event history analysis to test hypotheses based on three theoretical frameworks.The results indicate that(a)the variables developed from economic rationalism,including economic development,city resources and socio-demographic factors are significantly related to the establishment of HIDZs;(b)spatial location affects the establishment and diffusion of HIDZs.The competition and learning effects between adjacent cities does not lead to the establishment and diffusion of HIDZs,however,presents as a nationwide interaction;(c)peer pressure in external institutional environment is always exerting a positive impact on the establishment of HIDZs significantly.Competitive mimic is obvious because of isomorphism in cities of identical administrative level in the same province,which affects the diffusion of HIDZs in Chineseprefecture-level cities;(d)institutional change initiated by the state affects the establishment and diffusion of HIDZs significantly,which is much greater than the internal factors within the cities.In other words,HIDZs,whose dynamics should have mainly come from within cities themselves,are adopted not entirely on the basis of internal constraints but external factors.This study demonstrated the critical role of central and local government in constructing the new system economic development institution.As a whole,China case proves that the establishment and diffusion of HIDZs relates to both internal characteristics of urban areas and external institutional environment.The whole story starts from rational calculation based on internal characteristics of local governments,generates innovation behavior under the efficiency mechanism,and thereafter diffuses and spreads through the mandatory and imitation mechanisms as for the external institutional environment.This paper deepens our understandings of how external institutional environment shapes the local government decision-making.In particular,this research clarifies the crucial roles of national pressure and peer pressure in the diffusion of local government innovation and organizational convergence.From a higher theoretical level,this paper conducts a comparative analysis between the rational-driven,efficiency-oriented paradigm in economics and the significant roles of authority,imitation and legitimacyin organizational change.To sum,the establishment of development zone is the main economic behavior of Chinese local governments.It features both rational decision-making and external institutional environment.Therefore,the lens of sociological perspectives to analyze the innovation diffusion of public policy offers a new angle to understand local government behavior.