External Economies And The Development Of Rural Industry Agglomeration

The scattered location of Chinese rural industry and the series of problems it caused have attracted more and more concerns in recent years. The rural industry agglomeration has become the most important measurement to promote economic development of rural area and accelerate the process of industrialization and urbanization of the countryside. The theory of industrial agglomeration offers the theoretical basement for the rural industry agglomeration. External economies are the most important mechanism of industrial agglomeration .The rural industry agglomeration is the carrier of the development of rural industry. The paper analysis the process and the internal mechanism of the rural industry agglomeration from the viewpoint of the enterprises which are the principal microcosmic part of the agglomeration district, and exemplify a typical rural industry agglomeration, Huiguo Town of Gongyi City in Henan province. The network relationship between enterprises and the relation between enterprises and regional milieu are the emphases of the study, as well as the static and dynamic external economies for the enterprises that are caused by the industrial agglomeration. In the study, the enterprises are the main part of analysis and the region is the background.This paper consists of five parts besides the preface.In the first part, after giving a systematic evaluation of the academic studies of industrial agglomeration, the author considers that the external economies are the microcosmic economic foundation and the most important mechanism of the industrial agglomeration. This paper explores the relationship between external economics and industrial agglomeration firstly, then apply the theory to the rural industry agglomeration to study the process and the internal mechanism of the rural industry agglomeration through a concrete case.In the second part the paper studies the relation between external economies and industrial agglomeration theoretically. Firstly, the author illustrates the concept, the classification and the character of external economies. The external economies of thispaper are the decrease of cost and the increase of incomes that are caused by the relation between the enterprises and regional milieu. The increase in the external economies caused by the agglomeration of related and similar economic activities is aimed at the enterprises, which include static and dynamic external economies. The static external economies include the decrease of the production cost and the transaction cost; the dynamic external economies include the increase of collective learning and innovation capacity. The process from scattered location to concentration of the enterprises is the process from the weakness to strong of the external economies at the same time. The external economies come from the traded and untraded interdependence between the body of the agglomeration area, in another words, they originate from the closely relation between the enterprises and the relation between the enterprises and regional milieu. The author constructs a model of relation between industrial agglomeration and external economies, and indicates that they are cause and result mutually.The third part analyses the process of the wire and cable industry in the area of the case. After introducing the fundamental situation of the industry, the author compartmentalizes the process of the development of the agglomeration to two steps.In the fourth part, the paper applies the model to the development of the wire and cable industry in the area of the case. Firstly, the author introduces the regional production systems of the wire and cable industry .To investigate the relation between the agglomeration and the external economics, the author illustrates it from two aspects including the networks relation between enterprises and the relation between the enterprises and the regional milieu. The enterprises of wire and cable industry have constituted the networks of specialization and cooperation in which there are serious competit...