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(1)SMALL CITIES DEVELOPMENT AND INTERNATIONALIZATION DURING THE RAPID TRANSFORMATION PERIOD IN CHINA. al. ay. a. WANG QIANYI. ve r. si. ty. of. M. THESIS SUBMITTED IN FULFILMENT OF THE REQUIREMENTS FOR THE DEGREE OF DOCTOR OF PHILOSOPHY. UNIVERSITY OF MALAYA KUALA LUMPUR. U. ni. FACULTY OF ECONOMICS AND ADMINISTRATION. 2018. i.

(2) UNIVERSITI MALAYA ORIGINAL LITERARY WORK DECLARATION. Name of Candidate: WANG QIANYI Registration/Matric No: EHA150016 Name of Degree: Doctor of Philosophy Title of Project Paper/Research Report/Dissertation/Thesis (“this Work”):. a. SMALL CITIES DEVELOPMENT AND INTERNATIONALIZATION DURING THE RAPID TRANSFORMATION PERIOD IN CHINA. ay. Field of Study: Development Studies I do solemnly and sincerely declare that:. I am the sole author/writer of this Work; This Work is original; Any use of any work in which copyright exists was done by way of fair dealing and for permitted purposes and any excerpt or extract from, or reference to or reproduction of any copyright work has been disclosed expressly and sufficiently and the title of the Work and its authorship have been acknowledged in this Work;. (4). I do not have any actual knowledge, nor do I ought reasonably to know that the making of this work constitutes an infringement of any copyright work;. (5). I hereby assign all and every right in the copyright to this Work to the University of Malaya (“UM”), who henceforth shall be owner of the copyright in this Work and that any reproduction or use in any form or by any means whatsoever is prohibited without the written consent of UM having been first had and obtained;. ve r. si. ty. of. M. al. (1) (2) (3). I am fully aware that if in the course of making this Work I have infringed any copyright whether intentionally or otherwise, I may be subject to legal action or any other action as may be determined by UM.. U. ni. (6). Candidate’s Signature. Date. Subscribed and solemnly declared before, Witness’s Signature. Date. Name: Designation:. ii.

(3) SMALL CITIES DEVELOPMENT AND INTERNATIONALIZATION DURING RAPID TRANSFORMATION PERIOD IN CHINA ABSTRACT China’s economy has become famous for two reasons: one is the fast growth after the open-up reform with the double digit growth rate being recorded; the second is the use of globalization to drive its growth. As the growth model carrier, cities in China bear the responsibilities to drive the county economic development. The development of China’s. a. cities reflects the coordination among local stakeholder in land management, spatial. ay. planning, economic development, institutional management and infrastructure allocation.. al. The literature review illustrates the lack of researches towards the low-tier city development and internationalization in China. The lights have been shed to the major. M. metropolises, such as, Beijing, Shanghai and so on. Those low-tier cities (in prefectural. of. level and county level) received less concerns. However, even low in urban hierarchy, less in national support, and impossible to duplicate major cities’ growth mode, some of. ty. small cities in China obtain international reputation and shape their development mode. si. with local characteristics. Therefore, the low tier cities, largest in number, devoting in. ve r. national growth, deserve attention. By adopting the documentary review and case study approach, the thesis qualified the small city development and globalization process. ni. through the case study of Quanzhou, Yiwu and Nanning. The thesis findings inform the. U. traditional development mode (such as, relying heavily on heavy investment, exportoriented economy) may not be easily duplicated. Leveraging on local advantages (such as, culture, kinship, and government support), the low-tier cities can gain their. positions in the global arena. Further, city growth is not merely a reflection of growth theory, but an outcome involving the interaction of governments, spatial configurations, culture and historical legacy, and local stakeholders. Key words: China urbanization; Agglomeration economy; Urban internationalization. iii.

(4) PEMBANGUNAN BANDARAYA KECIL DAN PENGANTARABANGSAAN DALAM TEMPOH TRANFORMASI PANTAS DI CHINA ABSTRAK Ekonomi China telah menjadi terkenal atas dua sebab: Pertumbuhan yang cepat selepas reformasi dan pembukaan dengan kadar pertumbuhan sebanyak dua angka serta penggunaan globalisasi untuk memacu pertumbuhannya. Sebagai pembawa model pertumbuhan, bandar-bandar di China bertanggungjawab untuk memacu pembangunan. a. ekonomi negara. Perkembangan bandar-bandar di China mencerminkan koordinasi antara. ay. pihak berkepentingan tempatan dalam pengurusan tanah, perancangan ruang,. al. pembangunan ekonomi, pengurusan keinstitusian dan peruntukan infrastruktur. Kajian kesusasteraan menunjukkan kurangnya penyelidikan terhadap pembangunan dan. M. pengantarabangsaan bandar peringkat rendah di China. Tumpuan fokus pada metropolis. of. utama seperti Beijing, Shanghai dan sebagainya. Bandar-bandar peringkat rendah (pada peringkat wilayah dan peringkat daerah) menerima sedikit perhatian. Walau. ty. bagaimanapun, walaupun bandar-bandar ini rendah dalam hierarki bandar, kurang. si. mendapat sokongan kerajaan, dan tidak mungkin menduplikasi mod pertumbuhan bandar. ve r. utama, beberapa bandar kecil di China masih mendapat reputasi antarabangsa dan membentuk mod pembangunan mereka tersendiri dengan ciri-ciri tempatan. Oleh itu,. ni. bandar-bandar peringkat rendah yang besar bilangannya dan menyumbang kepada. U. pertumbuhan negara, patut mendapat perhatian. Dengan menggunakan kajian dokumentari dan pendekatan kajian kes, tesis ini mengkaji pembangunan bandar kecil dan proses globalisasi melalui kajian kes Quanzhou, Yiwu dan Nanning. Penemuan tesis ini menunjukkan mod pembangunan tradisional (seperti bergantung kepada pelaburan secara besar-besaran dan ekonomi yang berorientasikan eksport) mungkin tidak mudah diduplikasi. Memanfaatkan kelebihan tempatan (seperti kebudayaan, persaudaraan, dan sokongan kerajaan), bandar-bandar peringkat rendah dapat memperoleh kedudukan mereka di arena global. Tambahan pula, pertumbuhan bandar bukan semata-mata. iv.

(5) mencerminkan teori pertumbuhan, tetapi hasil yang melibatkan interaksi kerajaan, konfigurasi ruang, warisan budaya dan sejarah, serta pihak berkepentingan tempatan.. U. ni. ve r. si. ty. of. M. al. ay. a. Kata kunci: Perbandaran China; Ekonomi aglomerasi; Pengantarabangsaan bandar. v.

(6) ACKNOWLEDGEMENTS It is a genuine pleasure to express my deep sense of appreciation and gratitude to my mentor, philosopher and guide Dr. Cheong Kee Cheok, senior research fellow of Institute of China Studies, University of Malaya; Dr Li Ran, research fellow of Institute of China Studies, University of Malaya; Prof. Yeoh Kok Kheng, Head of Department, Department of Administrative Studies and Politics, Faculty of Economics and Administration,. a. University of Malaya; and Dr. Yong Chen Chen, Senior Lecturer at Faculty of Economics. ay. and Administration, University of Malaya. Their dedication and overwhelming attitude to the research promote me to conceptualize my thesis. Their timely advice, meticulous. al. scrutiny, scholarly advice and scientific approaches have help me to a great extend to. M. accomplish the thesis.. of. I would like to delivery my appreciation to Associate Prof. Dr. Yap Su Fei, for always supports and comments in modifying the thesis. Her extreme patience in reviewing my. ty. words and ideas ensured the academics of my work.. si. I thank profusely all the family members especially my husband, Mr Zhang for his. ve r. constant encouragement throughout my research period. His timely concerns, kind reminding, enthusiasm and dynamism have motivated me always.. ni. I owe a deep sense of gratitude to all the members and professors in Malaysian Chinese. U. Research Center, University of Malays for their kind support at every stage of my Ph.D career. Their promote inspirations, suggestions with kindness enables me to complete my Ph.D. It is also my privilege to give thanks to all my friends for their kind help and cooperation during my career.. vi.

(7) TABLE OF CONTENTS ABSTRACT ................................................................................................................iii ABSTRAK ................................................................................................................... iv ACKNOWLEDGEMENTS ....................................................................................... vi TABLE OF CONTENTS .......................................................................................... vii LIST OF FIGURES.................................................................................................... xi LIST OF TABLES....................................................................................................xiii LIST OF SYMBOLS AND ABBREVIATIONS..................................................... xv. a. CHAPTER 1: INTRODUCTION .............................................................................. 1. ay. 1.1 Background ............................................................................................................. 1 1.1.1 Liberalization .................................................................................................... 1. al. 1.1.2 Urbanization...................................................................................................... 2. M. 1.1.3 Specialization and Globalization ...................................................................... 3 1.1.4 Cities in China .................................................................................................. 3 1.2 Problem Statement .................................................................................................. 8. of. 1.3 Research Questions and Research Objectives ....................................................... 10 1.3.1 Research Questions ......................................................................................... 10. ty. 1.3.2 Research Objectives ........................................................................................ 11 1.4 Significance of Study ............................................................................................ 11. ve r. si. 1.5 Organization of this thesis ..................................................................................... 14. CHAPTER 2: LITERATURE REVIEW ................................................................ 18 2.1 Introduction ........................................................................................................... 18. ni. 2.2 Theoretical Perspectives ........................................................................................ 19 2.2.4 Frameworks ........................................................................................................ 28. U. 2.2.4.1 Institutional intervention .............................................................................. 29 2.2.4.2 The Balanced Scorecard .............................................................................. 30 2.2.4.3 Sustainable Urban Development Strategies ................................................. 31. 2.3 Empirical Research on City Development Strategies ........................................... 33 2.3.1 Industrial Zones .............................................................................................. 33 2.3.2 City Branding .................................................................................................. 34 2.3.3 Spatial Arrangement ....................................................................................... 37 2.3.4 Knowledge-based Urban Development .......................................................... 40 2.3.5 Building Environment Improvement .............................................................. 41 2.3.6 Stakeholders’ Role in Regional Development ................................................ 42 vii.

(8) 2.3.7 City development Planning and Implementation............................................ 43 2.3.8 City Development Issues ................................................................................ 44 2.4 Research Gap ......................................................................................................... 46 2.5 A Theoretical Framework for this Research ......................................................... 48. CHAPTER 3: RESEARCH METHODOLOGY .................................................... 52 3.1 Introduction ........................................................................................................... 52 3.2 The Case Study Approach ..................................................................................... 54 3.3 Documentary Review ............................................................................................ 56. a. 3.4 Applying the Case Study Method – City Selection ............................................... 58. ay. 3.4.1 City Selection Criteria: ................................................................................... 58 3.4.2 Cities Selected and Rationale for Selection .................................................... 60. al. 3.5 Conclusion ............................................................................................................. 61. M. CHAPTER 4: QUANZHOU..................................................................................... 63 4.1Introduction ............................................................................................................ 63. of. 4.2 History ................................................................................................................... 66 4.3 Administration Structure ....................................................................................... 69. ty. 4.4 Spatial Planning in Quanzhou’s Social-economic Development .......................... 71 4.4.1 Development of a Concentric Circle Spatial Layout 1980-1995 .................... 72. si. 4.4.2 From Concentric Circles to Hub-Spoke Spatial Structure 1995-2008 ........... 73. ve r. 4.4.3 The Zonal Distribution Structure Since 2008 ................................................. 75 4.5 Economy ................................................................................................................ 81 4.6 Quanzhou, the Maritime Silk Road and Cross Straits Relations ........................... 87. ni. 4.6.1 Quanzhou in Taiwan ....................................................................................... 87 4.6.2 Taiwan in Quanzhou ....................................................................................... 89. U. 4.7 Conclusion ............................................................................................................. 92. CHAPTER 5: YIWU ................................................................................................. 95 5.1 Introduction ........................................................................................................... 95 5.2 History ................................................................................................................... 96 5.3 Economy ................................................................................................................ 98 5.3.1. The “Yiwu Model” ........................................................................................ 98 5.3.2 A Distinctive Form of Globalization ............................................................ 105 5.3.3. Leveraging “the Belt and Road” Initiative .................................................. 106 5.4. Administrative Structure and Spatial Planning .................................................. 108. viii.

(9) 5.4.1. Expansion in Concentric Circles 1982-1991 ............................................... 110 5.4.2. From Concentric Circles to an Axis Structure 1992-1999 .......................... 111 5.4.3. Multi-nuclear Structure 2000-2012 ............................................................. 112 5.4.4. A New Structure from 2013......................................................................... 116 5.5. The Yiwu Conundrum ........................................................................................ 119 5.6. Conclusion .......................................................................................................... 120. CHAPTER 6: NANNING ....................................................................................... 122 6.1 Introduction ......................................................................................................... 122. a. 6.2 History ................................................................................................................. 123. ay. 6.3 Administrative structure and the role of government .......................................... 125 6.4 Spatial Planning ................................................................................................... 131. al. 6.5 Economy .............................................................................................................. 134 6.5.1 from Peril to Promise .................................................................................... 134. M. 6.5.2 Nanning’s Economic Promise ...................................................................... 139. of. 6.6 Conclusion ........................................................................................................... 140. CHAPTER 7: COMPARING GROWTH AND INTERNATIONALIZATION TRAJECTORIES .................................................................................................... 143. ty. 7.1 Introduction ......................................................................................................... 143. si. 7.2 Growth, Globalization and the Shenzhen Model ................................................ 145 7.3 Small Cities Growth and Globalization Trajectories........................................... 148. ve r. 7.3.1 Quanzhou - Intergenerational Growth and Globalization............................. 148 7.3.2 Inside-out Growth and Globalization – The Yiwu Model ............................ 150 7.3.3 State-led Growth and Globalization: Guangxi’s Nanning ............................ 152. ni. 7.4 Comparing Growth and Globalization Models ................................................... 153. U. 7.4.1 Contrasts ....................................................................................................... 153 7.4.2 Commonalities .............................................................................................. 155. CHAPTER 8: CONCLUSION ............................................................................... 159 8.1 Introduction ......................................................................................................... 159 8.2 The China Context and City Development ......................................................... 160 8.3 Implications for Theory ....................................................................................... 161 8.4 Implications for Policy ........................................................................................ 167 8.5 Research Objectives and Research Findings ....................................................... 170 8.6 Limitations of this Study ..................................................................................... 172. ix.

(10) U. ni. ve r. si. ty. of. M. al. ay. a. REFERENCE .......................................................................................................... 174. x.

(11) LIST OF FIGURES. Figure 1. 1:Structure of this Thesis .............................................................................. 17. Figure 2. 1: Sector-Territory Framework Proposed by Debrie & Raimbault ................. 24 Figure 2. 2: The Institutional Intervention Framework .................................................. 30. a. Figure 2. 3: Balanced Scorecard Framework .................................................................. 31. ay. Figure 2. 4: Theoretical Framework for this Study ......................................................... 50. al. Figure 3. 1: Structural hierarchy of the administrative divisions of the People's Republic. M. of China ........................................................................................................................... 59. of. Figure 3. 2: Geographical location of selected cities ...................................................... 61. ty. Figure 4. 1: Quanzhou’s Xi Street................................................................................... 65. si. Figure 4. 2: Quanzhou’s administrative map .................................................................. 71 Figure 4. 3: Spatial Functional Clusters in 1995 Master Plan, Quanzhou. ..................... 75. ve r. Figure 4. 4: 2008 Master Plan, Quanzhou. ..................................................................... 76 Figure 4. 5: Urban Infrastructure in Quanzhou’s Social-Economic Clusters in Central. ni. Coastal Zone.................................................................................................................... 77. U. Figure 4. 6: Cai-Clan Traditional Residential Buildings ................................................ 89. Figure 5. 1: The first three generations of Yiwu Commodity Markets ......................... 100 Figure 5. 2: The Multi-nuclear Structure in Yiwu Master Plan 2000-2020. ................. 113 Figure 5. 3: New Clusters under the Master Plan 2000 – 2020 .................................... 114 Figure 5. 4: The New Rural Construction Scheme in Tashan Village, Fotang Town, Yiwu in 2009. ................................................................................................................ 116. xi.

(12) Figure 5. 5: Inland Port in Yiwu ................................................................................... 118. U. ni. ve r. si. ty. of. M. al. ay. a. Figure 6. 1: Nanning Cluster Spatial Layout in in Nanning Master Plan 2006-2020 ... 133. xii.

(13) LIST OF TABLES. Table 1. 1:City system based on Social-Economic Index in China ............................... 4. Table 2. 1: Growth Theories ........................................................................................... 21. a. Table 2. 2: Theories and their Dimensions useful for the Theoretical Framework ....... 49. ay. Table 4. 1: Administrative Divisions of Quanzhou ........................................................ 70 Table 4. 2: Functions of Social-economic Clusters in the 2008 Master Plan, Quanzhou.. al. ......................................................................................................................................... 78. M. Table 4. 3: Regional Priority Development Districts and Ecological Protection ........... 79. of. Table 4. 4: Thirty-Minute Transportation Network, Quanzhou, 2008. ........................... 81 Table 4. 5: Key Economic Indicators of Quanzhou, 1949-2013..................................... 82. ty. Table 4. 6: Quanzhou Economic Indicators in a Provincial and National Context, 2013. si. ......................................................................................................................................... 83. ve r. Table 4. 7: Value Added of Large-scale Industrial Enterprises in Quanzhou, 2013 ...... 84 Table 4. 8: FDI by Type in Quanzhou, 2014. ................................................................. 85. ni. Table 4. 9: Selected Indicators of Foreign Presence in Quanzhou, 2012 and 2013 ........ 86 Table 4. 10: Selected Cultural Events, Academic Forums and Cross-strait cooperation. U. Expo in Quanzhou. .......................................................................................................... 91. Table 5. 1: Yiwu’s GDP Trends, 2000-2013 .................................................................. 99 Table 5. 2: Changes in Selected Economic Statistics, 2010-2014 ................................ 103 Table 5. 3: Administration Structure in Yiwu, 2013..................................................... 109 Table 5. 4: The Bridges in Consolidating Yiwu ........................................................... 112. xiii.

(14) Table 6. 1: Nanning Administration Structure, 2011 .................................................... 126 Table 6. 2: Nanning Economic, Industrial, and Development Zones ........................... 127 Table 6. 3: City Clusters and Functions in the Beibu Gulf Economic Zone................. 129 Table 6. 4: Transportation Network Projects in the Beibu Gulf Economic Zone Plan . 130 Table 6. 5: Cluster Development Plan and Sub-clusters in Nanning Master Plan 20062020 ............................................................................................................................... 133. a. Table 6. 6: Nanning: Growth in Industrial Value Added, 1990 – 2012 ........................ 134. ay. Table 6. 7: China-ASEAN Expo Statistics, 2004-2014. ............................................... 136. al. Table 8. 1: Quanzhou Development in relation to Existing Theories ........................... 162. M. Table 8. 2: Yiwu Development in relation to Existing Theories .................................. 163. of. Table 8. 3: Nanning Development in relation to Existing Theories ............................. 164. U. ni. ve r. si. ty. Table 8. 4: Research Objectives and Research Findings .............................................. 171. xiv.

(15) LIST OF SYMBOLS AND ABBREVIATIONS. World Commission on Environment and Development Public Private Partnership Central Business District. si. ty. of. M. al. ay. a. Special Economic Zones Foreign Direct Investment Privately Owned Enterprises Both State-owned Enterprises Balanced Scorecard Sustainable Urban Development United Nations Educational, Scientific and Cultural Organization China Commodity City International Commercial Center Reconstruction within the Village Spatial Territory Reorganization Gross Domestic Product New Rural Construction Scheme Hence Beiyuan Industrial Zone Yiwu Economic Development Zone China-ASEAN Free Trade Agreement One Belt One Road Beibu Gulf Economic Zone China-ASEAN Exposition. U. ni. ve r. WCED PPP CBD SEZ FDI POE SOE BSC SUD UNESCO CCC ICC RV STR GDP NRCS BIZ YEDZ CAFTA OBOR BGEZ CAEXPO. xv.

(16) CHAPTER 1: INTRODUCTION. 1.1 Background Chinese cities of all sizes are models and drivers of economic growth. City development involves and reflects the accumulated decisions of governments in provisions of infrastructure, land management, spatial arrangement, economic development and. a. institutional management. With no exception, China cities are evolving through the. ay. changing policies, transforming through liberalization, urbanization to specialization, and. al. through efforts to position themselves from just being domestic markets to become. M. international markets. More specifically, liberalization drove the initiation of city development in contemporary China and sparked, sometimes rekindled, industrialization.. of. Large-scale urbanization, in line with industrialization witnessed in the last few decades, led to dramatic urban expansion and development. In accordance with a branch of growth. ty. theory which articulated the significance of technology in driving growth, cities in China. si. are enthusiastic in formulating their specific innovation strategies to maintain the. ve r. sustainable growth. These growth drivers are briefly discussed with respect to China. ni. below.. U. 1.1.1 Liberalization The open-up reform since 1978 has sown the seeds of economic liberalization in China. Through decentralization, local governments were empowered to mobilize resources, and allowed to access and make local social-economic decisions in promoting regional. development (Wei, 1995). Thus the cities were enthusiastic in being designated ‘Special Economic Zones’ in terms of attracting foreign investment, famous examples being Shenzhen (Ng, 2003) and Suzhou (Wang, Shen, & Chung, 2015). Together with loosened 1.

(17) administrative restrictions on international trade and relaxation of foreign exchange controls, most of the coastal cities were led by local governments with the aim to build genuine export-oriented economies.. 1.1.2 Urbanization Incentivized by its open-up reform, China has experienced unprecedented urbanization. a. since the 1990s. The liberated migration of the rural labor force into cities continuously. ay. extended the urban city limits, which resulted in farmland encroachment and intensified. al. urban accommodation pressure (Wang, Zhang, & Cheong, 2014a). Meanwhile, rapid. M. industrialization in conjunction with urbanization led local governments to develop and extend their respective urban jurisdictions as fast as possible in order to capture the. of. benefits of economic development. Local governments appealed to underlying concepts such as spatial concentration in their city master plans, all of which seek to encroach upon. ty. rural land to support urban expansion (Long, Tang, Li, & Heilig, 2007).. si. The over-heating city economy was reflected in the mushrooming of industrial zones. ve r. national wide. To attract investment, the local governments built numerous industrial estates to accommodate national and international industries (Wei, 2015c; Yang & Wang,. ni. 2008). This had created a problem where the peasants who made a living in urban areas. U. but still lived the lifestyles of farmers, behaved differently from the urban counterparts. To reconcile the culture clash, regional zones had to be identified by local government in urban area to accommodate them (Wang, Zhang, et al., 2014a).. 2.

(18) 1.1.3 Specialization and Globalization A thriving economy owes much of its success to technology and innovation. The attempt of China in transforming itself from simply manufacturing to emphasize also branding, shifted many a city plan to focus high-tech research and development. The emergence of ‘University Towns’ and ‘Technology Parks’ are the results of this initiative, and reflects the ambitions of local governments to build a knowledge-based economy (Li, Wang, &. a. Cheong, 2016b; Wei, 2015c). Apart from that, with the proposed One Belt One Road. ay. strategy announced in 2013, China is seeking to become a world leader in internationalization and to remake the global economic order. To this end, the strategic. al. sea-port cities and land-port cities are assigned with specialized development functions. M. in order to build China as international logistic hub (Li, et al., 2016b). Meanwhile, the cities along the Silk Roads are all equipped by their local governments with specific and. of. distinctive functions, in order to achieve and sustain their growth and compete in the. si. ty. global market.. ve r. 1.1.4 Cities in China. Both urban system and the social-economic index are employed into measuring city levels. ni. in China. Regard to the urban system, Chinese cities are classified into three levels:. U. provincial level, prefectural level and county level. While, according to the city size and city social-economic conditions, the cities in china are specified into four tiers. The factors determine the city tier are GDP, politics, and population (Table 1.1), where politics refer to the urban governing. Even some cities rank differently based in each area, the average index define their actual tier. The top tier city remarks the city with densely population and well-developed economy, which influencing the China economically, culturally and politically. It attracted huge. 3.

(19) influx of foreign enterprises. Beijing, Shanghai, and so on are considered as tier one cities. Tier two cities are those with fast development rate, enjoying the benefits from the cheaper labor costs, such as, Qingdao and Hangzhou. Commonly, tier 3 and tier 4 cities are generalized as small cities, largest in number in China with less developed socialeconomic condition. Table 1. 1:City system based on Social-Economic Index in China Population. Controlled by central government. Over 15 million. Tier 2. 68-299. 3-15 million. Tier 3. 18-67. Tier 4. Below 17. Provincial capital cities and subprovincial capital cities Prefecture capital cities County level cities. of. M. al. ay. a. Politics. Tier 1. GDP (US$ billion) Over 300. 150,000-3 million Below 150,000. ty. Source: data collected from China’s tiered city system, http://multimedia.scmp.com/2016/cities/. si. Beijing, the capital of China, is considered as one of the most developed cities in China. ve r. with recorded GDP of 2.49 trillion yuan in 2016, accounting for over 3% of national GDP (Beijing Statistical Bureau, 2016). The 6.7% of city economy growth in 2016 owes much. ni. to the technology industries. The city economy was tripled in size in only eight years. U. since 2004, due to the booming of the tertiary sector, which nowadays generates more than 70% of total output (Beijing Statistical Bureau, 2016). It enjoys the benefits bought by accommodating the vast number of state-enterprises. In 2012 Global Fortune 500 list, 89 Chinese enterprises were listed, among which, the state enterprises accounted the lion’s share (Malik, Malik, Makhdoom, & Makhdoom, 2016). About 81 of these top global Chinese enterprises set up their offices in Beijing, and 48 of them functioned as headquarter in Beijing. Meanwhile, 345 of the foreign companies on the list have office. 4.

(20) in Beijing. Home to numerous top enterprises, it enables Beijing to develop with sufficient domestic and foreign investments. Further, Beijing is known for its high-tech industries. The outskirt of city downtown was surrounded by the development zones. Zhongguancun, dubbed ‘China Silicon Valley’ clustered the electronics, in line with Yongle Economic Development Zone becomes the center of Pharmaceuticals, information technology and material engineering, accelerate the restructuring of city. a. economy and maintain the city sustainable development.. ay. As a central point of north-south coastline of China, Shanghai has served as a national. al. trading center and logistic hub to China since the Opium War. Its economic reviving since the establishment of PRC relied heavily on open-up reform when Shanghai recorded a. M. rapid growth rate. Under the national government support, Shanghai has successfully. of. restructured its economy, with its tertiary sector accounting for over 50% of GDP since 2001(Shanghai Statistical Bureau, 2016). The development of financial sector, logistic. ty. sector, trade sector and information service sector contribute and maintain the city. si. prosperity. Among the tertiary sector, financial service is the pillar industry, accounting. ve r. the lion’s share of output. The financial sector kept consistent growth, realized a 22.9% growth in 2015, contributing to 16% of total GDP (Shanghai Statistical Bureau, 2016).. ni. Meanwhile, Shanghai, as the largest exporter in the world and top three importers,. U. recorded an average 18% growth in trade sector in the last two decades. Inspired by these performance, Shanghai is gearing up to expand its global international center and international hub, stimulating further growth. Shenzhen, a linear coastal city, is situated in southern China, lying north of the prosperity metropolitan-‘Hong Kong’. It was selected as the experimental city for socialist market. liberalization since 1979, which spurred its initial growth. Foreign investment helped the city to reenergize its leadership in export-orientated economy since 1990s. With. 5.

(21) government coordination, Shenzhen is now a headquarter city, no longer the center of labor-intensive industries. It houses numerous China’s international and reputable financial and network enterprises and incubates various IT giants, such as Huawei and Tencent to seek long-term development. Along the city development process, national support is appreciated, without which, Shenzhen is not able to branch out from the fishing village it once was. Whatever Shenzhen’s methodologies, these efforts have tended to. a. generate a knowledge economy with adherence to socialist principles. The large number. ay. of headquarters accommodated marks a city’s achievement and international influence as well as secure a city’s future sustainable development in terms of its international prestige,. al. tax income and talents concentration (Zhao, 2005). The approaches adopted by Shenzhen,. M. especially in grasping investment and technology is the common methods duplicated in. of. various cities in China.. Located in the Shandong Peninsular, Qingdao is the economic engines of Shandong. ty. Province. As a costal open-up city, Qiangdao’s revive was driven by great national. si. support and fast development of secondary industries. The active involvement in the. ve r. foreign trade makes Qingdao as a dominate international hub in north part of China, reflecting in the ever-increasing service output. The secondary industry and service sector. ni. contribute to most of the GDP, with output of RMB 364.14 billion and RMB 401.28. U. billion, accounting for 45.5% and 50.1% of city economy respectively in 2014 (Qingdao Statistical Bureau, 2015). The pillar industry in the city include electronics, biopharmaceuticals, textile and son. Among the electronics companies, Haier and Hisense promote Qingdao’s international brand and spur the economy. The city itself participate actively into setting up the free trade agreement between China and Japan, China and South Korea also draw great international attention. Meanwhile featured as marine economy, the emerging of the marine technology, the water management, and marine logistics is with high expectation for Qingdao. 6.

(22) As the capital city of Zhejiang Province and neighbor to Shanghai, Hangzhou is located in Yangzt Delta Area. The city is quite dynamic in fueling its economy, leading the regional development. In 2015, the city GDP was recorded as RMB 1005.4 billion, with 10.2% growth rate, while the national GDP growth was 6.9% (Hangzhou Statistical Bureau, 2016). The private sector dominates Hangzhou’s economic development. The private trading and sales volume accounted to 56.3% of total trading sector. Meanwhile,. a. the private investment in fixed assets made up 53.5% total fixed assets (Hangzhou. ay. Statistical Bureau, 2016). More than 40% of government fiscal income came from private economics (Hangzhou Statistical Bureau, 2016). Beyond the prosperous private sector,. al. the city growth are also driven by technology support. The city is emerging as an. M. international technology hub, catalyzed by the international expansion of Alibaba, which emerged as the world largest ecommerce marketplace. The city’s financial sector is also. of. facilitated by Alipay and vast amount of private capital. Leveraging on the private sector,. ty. emerging technological cluster, and growing financial service sector, Hangzhou is. si. transferring its traditional growth mode to embrace the ‘China Dream’. It symbolizes the. ve r. emerging of technology and service-oriented economy. Despite being the powerful driver of China’s growth in terms of their number, the small. ni. cities have been paid little attention in the research arena. Yet, the low-tier cities, defined. U. as the prefecture and county level cities, comprising about 60% of national GDP, and housing more than 70% of population, are expected to have significant prospects ("Where China's future will happen," 2014). These small cities, breaking through the traditional development mode, differentiated from large metropolis, expand themselves through localized modes. For instance, Shouguang, in the east, county-level city in Shandong. Province, position itself as an agriculture-dominated city, stressing the role of primary sector in fuel its economy. Kunshan in the south, county-level city in Jiangsu, housing the Suzhou Industrial Park, ranked as the top county-level city in China, leverages the 7.

(23) strategic position to reinforce its role as an industrial base between Shanghai and Suzhou. Shihezi in the west, county-level city in Xinjiang Automats Region, targets to be an aircraft modification center and the drone logistic hub connecting East Europe and South East Asia. Manzhouli, in the north, county-level city in Nei Monggol Autonomous Region, benefits from cross-border trading. Beyond those, there are still vast number of cities creating various incomparable initiatives to speed the catch-up growth, such as. a. Quanzhou, Jiangyin, Nanning, and so on, complementing the broader definition of ‘China. al. ay. Development Mode’.. M. 1.2 Problem Statement. Many recent studies worldwide have been devoted to analyze the city development in. of. terms of spatial structure (Cheng & Masser, 2003; Fang, Song, Zhang, & LI, 2005; Salet, Thornley, & Kreukels, 2003), local stakeholders’ role (Jones, Tefe, & Appiah-Opoku,. ty. 2015; Wang, Zhang, et al., 2014a), economic strategies (Obeng-Odoom, 2014; Xiao &. si. Xiao, 2015), environmental sustainability (Cui, 2014; Schnell, Potchter, Yaakov, &. ve r. Epstein, 2015) and provision of infrastructure (Brockfeld, Barlovic, Schadschneider, & Schreckenberg, 2001; Jing, 2014; Taniguchi, Thompson, Yamada, & Van Duin, 2001),. ni. mostly by using conventional statistical methodologies.. U. Despite all these, significant knowledge gaps exist in explaining the specific and changing roles of city governments in stimulating city development, especially in response to and/or in leveraging the forces of globalization. Many studies adhere to examining city planning, although this represents just one, albeit critical, area of promoting city growth. In addition, there is little recognition that cities approach development and internationalization in distinctive ways, shaped by their historical, geographical, economic and socio-cultural contexts. The foreign investment, export-driven model. 8.

(24) represented by Shenzhen, for instance, is just one of many models embraced by cities in China. Meanwhile, quantitative analysis of urban development associated with policy changes often requires huge data bases not easily available. Further, much of the analytical narrative of city development apply only to a particular period or to a particular policy regime. Few, for instance, have investigated the cities from a historical perspective. Yet. a. the age and antiquity of China’s cities point to the relevance of history in their growth or. ay. decline. Many research studies have also been devoted to investigating city development. al. at the national level, focusing on how national policies affect the city development (McCann, 2003; Parnell & Robinson, 2006; Tian & Ma, 2009). In doing so, the role of. M. city governments executing local development programs are not given sufficient attention.. of. Lastly, city development reflects the accumulated decisions of numerous local stakeholders in providing infrastructure, land management, spatial arrangement,. ty. economic development and institutional management. This cast of characters however. si. varies from city to city.. ve r. Also, cities range from metropolis (Beijing, Shanghai) to much less populous county cities (e.g. Yiwu in Zhejiang province and Shouguang in Shandong province with. ni. populations of only 1.08 million and 0.95 million respectively in 2016. While large cities. U. have been the foci of attention, small cities and their development models are seldom if ever in the limelight. Yet in these cities are found many models of growth and development that have relevance for other cities of the world and from which major lessons can be learned. China’s small cities are the focus of this thesis. The overarching objective is to attain a. deep understating of the interaction between urban development and local policies. For. 9.

(25) this purpose, qualitative research describing and analyzing the development and internationalization of China’s small cities is attempted.. 1.3 Research Questions and Research Objectives In addition to more generic questions about city development and growth, a large number of questions can be asked regarding the dynamics of small cities. This thesis cannot hope. a. to address comprehensively these questions. Rather the focus here is to understand the. ay. growth and internationalization of small cities from a historical context, comparing these. 1.3.1 Research Questions. of. M. specific research questions are listed below.. al. experiences with mainstream theories of growth and internationalization. Thus, the. ty. 1. How does the geographic history/ culture shape the low-tier cities’ characteristics. si. in terms of business climate and spatial layout?. ve r. 2. How does the local government respond to national policies and make adjustments according to local characteristics in formulating its own policies, in. ni. order to promote low-tier city development?. U. 3. Given the advantages and disadvantages associated with the city’s characteristics, including history, geography and size, what are the alternative ways in seeking a small city’s internationalization?. Addressing these questions are the research objectives are formulated as follows:. 10.

(26) 1.3.2 Research Objectives 1. To identify the impact of history and culture on shaping the low-tier cities’ characteristics in terms of business climate and spatial layout. 2. To analyze the actions and adjustments city governments take in response to national strategies according to local characteristics in formulating its own policies, to promote city development. identify. the. common/. unique. characteristics. of. small. cities’. a. 3. To. ay. internationalization paths, given the advantages and disadvantages associated. al. with the city’s characteristics, including history, geography and size.. M. 1.4 Significance of Study. of. Over the decades, the series of evolving economic transformations in China have influential repercussions for urban development. Since the city is the essential physical. ty. unit in the nation, how well the city is developed affects national social-economic. si. performance. At the same time, national development is itself impacted by the growth of. ve r. cities. Much of the literature on China’s economic growth has had a macroeconomic focus. By refocusing on urban growth and development, this study hopes to help redress this. ni. imbalance.. U. So far, large cities in China have received the bulk of the attention in urban studies of China. However, there are far more small cities than those classified as “top-tier” and “tier two” cities. Through case studies of three cities, this study seeks to show that they also play a major role in China’s growth and dynamism. In doing so, they deploy many innovative strategies to overcome their size handicap. The role of the state, as the policy maker and implementer, has a crucial impact on city development. But “the state” exists at three levels – central, provincial and local. How. 11.

(27) these three levels interact is crucial to the success of any strategy or program. The case studies of these cities provide a good opportunity to examine this interphase. Therefore, the thesis pays particular attention to the role of government during the city development process. In this thesis, the different levels of government acting together is shown by the case of Nanning (Chapter 6), the city government acting proactively before drawing support from higher levels of government by the case of Quanzhou (Chapter 4) and the. a. city government acting as the primary facilitator by the case of Yiwu (Chapter 5).. ay. Beyond the interaction of the levels of government, other stakeholders also play a role to. al. shape the overall outcome. These other stakeholders include civil society and foreigners who bring with them financial resources and technology. The success stories portrayed. M. in these three case studies highlight the contribution made by each. Leveraging the. of. resources made available by each stakeholder has been the key to each city’s successful experience.. ty. The innovative approaches deployed by the respective local governments offer not only. si. valuable insights on the practice of development but also speak to theory, or rather their. ve r. inadequacy in dealing with the richness of development experiences. The departures from mainstream theories described here do not undermine existing theories but argues. ni. for the need to extend them. Of particular significance is the story of Yiwu (Chapter 5).. U. In the manner in which it approached globalization, it eschewed the mainstream globalization strategy of export incentives, attraction of foreign direct investment and state-supported infrastructure development. Instead, it relied on an organic process of. growth in which globalization is its logical outcome. This process, requiring far less resources and institutional support, is also more feasible for small cities than mainstream globalization strategies.. 12.

(28) Meanwhile, the cities are evolved through more or less deliberate actions guided by cultural values and historical legacy, all requiring attention. City development, a reflection of the transforming policies, culture, and value, cannot be considered as mere social and spatial outcomes, but a product amplified by consciously symbolizing the cultural traits and values embodied in the process of development. The city can be treated as being made up of tangible assets shaped by the intangible historical legacy. The. a. strategic actions taken by citizens, in fact, are impacted by the values and culture passed. ay. through many past generations. Therefore, urban development should take into consideration culture and history. This is no better illustrated than in the case of Quanzhou. al. (Chapter 4) where its history of outward migration to Taiwan and Southeast Asia plays a. M. vital role in its present development. A different history shaped the growth, or rather the. of. lack of it, of Nanning (Chapter 6), requiring extensive state support to promote growth. Because so little has been researched on small Chinese cities, analyses of city. ty. development among these cities represent original contribution to knowledge. As the. si. three selected case studies show, a multitude of activities support city development,. ve r. reflected in various configurations. Spatially, the concentration of social activities, as a visible way, symbolizes both government intervention and social aggregation in urban. ni. scope. The enlargement of the scope and scale of urban economic activities requires the. U. city to come out with spatial configuration, in order to mobilize the labor resources and allocate the development space for sustainable growth. The spatial aggregation, considered as the logical consequence of evolving patterns of social norms, keep the citizens aware of urban changes. The spatial configuration shifts with social-economic interchange. Successful city innovation is a reflection of effective coordination of collective actions in spatial norms, which requires the awareness in academic arena.. 13.

(29) As the urban studies dominated by qualitative research, the case study of single city enables us to examine how political, historical, institutional, environmental, and spatial factors interact in practice to revive and prosper the city. Differentiating from the quantitative studies, the thesis attempts to answer ‘why’ and ‘how’ the city was shaped through various factors rather than ‘what ‘the city development results are. The qualitative approach, being employed as the preferred methods in the thesis, is able to. a. gain the audience deep insights into city development.. ay. Finally, growth theory has pointed to capital investment in leading economic. al. development. As an economic growth driver, city development is also a verification of this conventional wisdom. Through the analysis of the city development process from. M. liberalization, urbanization to internationalization, capital-driven growth can be. of. witnessed but technological and innovation factors gradually dominate city development, which verifies the existing theory and links the application of theory in development. si. ty. experience in the city context.. ve r. 1.5 Organization of this thesis. The structure of this thesis is shown in Figure 1.1. The thesis contains seven chapters.. ni. After this chapter that introduces and provides a broad background of the topic chosen. U. for research, defines research questions and objectives while elaborating on the research’s significance, Chapter 2 is devoted to a review of literature, from which research gaps can be identified. The literature review is divided into a section that elaborates on the theories relevant to the analysis of this research and another that covers empirical studies on city development in China. In relating theories to empirical work, an attempt is made to critique the relevance of these theories, all of which have been developed for urban settings outside China. This critique, together with the earlier review of existing research,. 14.

(30) should reveal the research gaps that this research attempts to address. From these gaps and the research questions already posited, a theoretical framework that underpins this research can then be developed. Chapter 3 details the research methodology used. Because the objective is in depth analysis to gain understanding of the dynamics and processes of city development from a more holistic perspective than is the case with most studies, the research paradigm. a. selected is the qualitative approach. This approach however, while appropriate for in-. ay. depth analysis, cannot be used to cover a large number of cases. Hence, this chapter. al. outlines the selection criteria for the cities to be included. The cities chosen for analysis are Quanzhou, Yiwu and Nanning. The models of growth and internationalization. M. exemplified by each selected city are far different from what are expected from. of. mainstream theories.. Chapters 4 to 6 are analytical chapters, each containing an in-depth case study of a small. ty. city. Chapter 4 deals with Quanzhou, a coastal city in Fujian province. This city was. si. chosen as an example of the importance of history in its rise and decline, and recent. ve r. reemergence. It shows how the local government is able to leverage the city’s history to its own advantage. In doing so, it receives help from the central government which also. ni. recognized its historical role.. U. The second city selected for analysis in Chapter 5 is Yiwu, a county level city in Zhejiang province. Its similarity to Quanzhou lies in that the city’s government played a crucial role in its development and that the central government contributed importantly.Another similarity lies in the role of geography in facilitating trade. Unlike Quanzhou, however, history, although matching Quanzhou in antiquity did not play much of a role in Yiwu’s rise. Unlike Quanzhou, Yiwu is an inland “port”, its rise from a center for petty traders making a compelling story. No less fascinating is the story of its internationalization.. 15.

(31) Chapter 6 examines the case of Nanning, the capital city of the Guangxi Autonomous Region. Larger population-wise than the other two cities and also tracing its origin to ancient times, the city’s growth was affected by its geography as a frontier city. This impact was negative for centuries when China and Vietnam were adversaries but positive in recent times as China warms up to ASEAN. Chapter 7 compares the development and internationalization strategies followed by the. a. three cities. They reveal features distinct to each city that have not received much. ay. attention in discussions in economic growth, development and internationalization.. al. Despite their modest size compared to other cities in China, these cities bear comparison with many other cities of the world. The overall lesson from these comparisons is the. M. existence of many models outside the mainstream that have been successfully leveraged. of. to achieve successful outcomes. It is also important to remember that each of these models carried its own risks and vulnerabilities.. ty. Chapter 8 concludes by integrating the findings with the research questions and objectives.. U. ni. ve r. si. In doing so, it highlights implications for theory, and policies and their implementation.. 16.

(32) a ay al M. U. ni. ve r. si. ty. of. Figure 1. 1:Structure of this Thesis. 17.

(33) CHAPTER 2: LITERATURE REVIEW. 2.1 Introduction City development is of great concern worldwide, since it directly affects the national economy at the macro-level and people’s livelihood and welfare at the micro-level. Current studies span a wide area, aiming to identify factors affecting urban development, characterizing and assessing urban setting, and tracing city development trajectories,. ay. a. among many others. At the same time, many analyses of city development focus not only on the city, but to embed city development in a wider regional development context.. al. Whatever the methodologies and theories being employed, all current studies underline. M. the significant role of the city in sustaining national development and seek feasible. of. solutions to secure sustainable city futures.. Given the centrality of human welfare and sustainability, city development has drawn. ty. multidisciplinary attention, involving, among several disciplines, economics, planning,. si. environmental science, architecture and engineering. However, economics still dominates. ve r. the prevailing narrative. The literature review in this chapter reflects this emphasis. From a theoretical perspective, it surveys theories of growth, both applied typically to the macro. ni. economy but also specifically to urban development. With respect to city-specific theories, urban policies, city development strategies, the relationship between the public and. U. private sectors in policy-making and implementation, the mechanics of city master plans, and other city development issues are reviewed. This review is organized into three main sections. The first section is about theories that have relevance for the subject under discussion. This is followed by empirical work relating to city development strategies with special reference to China where such research exists. The final section brings together the review undertaken into the earlier. 18.

(34) sections by identifying research gaps. Doing so provides the rationale for the research questions posed at the beginning of this study and the corresponding research objectives. The theoretical/conceptual framework of this thesis is then drawn up.. 2.2 Theoretical Perspectives Cities are microcosms of a national economy. Indeed, some Chinese cities are more. a. populous and their economies larger and more complex than some countries. For this. ay. reason, growth theories applied to economies also have relevance for city growth and. al. development. These theories are the starting point for this literature review. Additionally,. M. there are theories that have particular relevance for urban economies. These are discussed next. The applicability of elements of these theories is summarized at the end of this. ty. of. section.. si. 2.2.1 Growth Theories. ve r. Discussions of economic growth go back all the way to Adam Smith’s The Wealth of Nations, which argued economic growth was supported by capital accumulation and labor. ni. inputs. A body of work built around and extending Smith’s arguments (e.g. David Ricardo. U. and diminishing returns to land). This model, referred to as the classical growth model, was later extended by Harrod (1939) and Domar (1946), who examined economic development in terms of the savings rate and capital productivity. This became known as the Harrod-Domar exogenous growth model. According to what were stressed above,. in order to achieve regional development, the role of government should be a promoter of investment opportunities. Some economists argue it is the model advanced by Thomas Malthus which predicted a more rapid growth of population than of goods produced was. 19.

(35) in fact the classical growth model. Without joining in the debate, the prediction of the Malthus model has been shown to be incorrect and holds little interest in current narratives on growth. However, the effect of capital accumulation in promoting economic growth was questioned by Solow (1956), who argued that the effect of savings on economic growth can only be temporary. By his account, only technology can drive long-run economic. a. growth. His work launched what became known as the neoclassical growth model. This. ay. model, however, should not be confused with neo-classical theory, in which economic. al. growth is determined by the free market with its role of optimal resources allocation. According to Lal (1983), ‘Getting the prices right’ was emphasized in neo-classical. M. theory, as the price acts as the decisive factor in decision-making of suppliers and. of. demanders. In the empirical research done by Martinussen (1997) to identify, elicit and analyze the central role of market forces in resources allocation, it was admitted that in. ty. many instances the market failed to achieve efficient resource allocation among various. si. economic activities, while government failures that damage development were even more. ve r. severe. In this regard, whatever the efforts, the role of government is to ensure the economic operations that adheres to the competitive market principles and resources. ni. freely flow to the most efficient users.. U. While neoclassical growth models assume technology to be exogenously determined, endogenous growth theory, proposed by Romer (1980) argues that technology is endogenous to the growth model, and seeks to explain how technological advance can materialize. A key feature of this theory is the role of technology in driving growth. The government then has an important role in promoting technology development. The structuralist perspective model was developed by Schumpeter (1934) who explicitly defined the difference between ‘growth’ and ‘development’. The former represents the. 20.

(36) increase in capital and production, while the latter suggests the renovation of technology and practices to achieve new production techniques, (i.e. restructuring of production process). In this regard, structural transformation is fundamental to promote economic development. Chenery (1986) further confirmed the effectiveness of structural transformation in accelerating economic growth through its essential role in resources reallocation to sectors of higher productivity. However, to facilitate structural. a. transformation of the economy, the government has a major responsibility with its de-. ay. facto role in policy-making (Martinussen, 1997).. al. The key features of these theories for city development are summarized in Table 2.1.. Theory. M. Table 2. 1: Growth Theories Drivers of Growth. Role of Government. Capital, labor and land Savings. Promote capital accumulation. Neo-Classical Growth/Theory. Getting prices right Exogenous technology. Minimize market distortion. ty. Structural transformation Disruptive technology. ve r. Structuralist Theory. Endogenous technology. si. Endogenous Growth Theory. of. Classical Growth Theory. Promote technology development Major role in driving transformation. ni. 2.2.2 Theories applicable to Urban Development. U. Bridging macroeconomic growth and city-centered development is sustainability theory which applies at both levels. Although the definition of sustainability varies across countries and projects, a thriving and durable society owes much of its success to its ability to successfully integrate social, economic, environment, and institution factors over the long term. The term ‘sustainability’ was initially introduced in 1972 and applied to development projects since 1987. It was defined as the ability to develop without. 21.

(37) compromising the benefits of future generations (World Commission on Environment and Development (WCED), 1987). The theory was later broadened to embrace a multidisciplinary context. According to Beatley and Brower (1993), the social criteria for achieving sustainability was to promote livability of a community. In this regard, (Wang, Zhang, et al., 2014a) who empirically examined how local participation affected the land consolidation process in China,. a. stressed the cultural identification role in ensuring sustainability. From an economic. ay. perspective, sustainability emphasizes self-sufficiency capability and development of the. al. economy in terms of the increase in employment opportunity and investment (Berke & Conroy, 2000). Environmentally, sustainability also implies the ability to preserve the. M. ecosystem, such as optimal resource allocation in mitigating ecological degradation. of. (Georgiadou & Hacking, 2011; Scrase & Sheate, 2002; Wheeler, 2013). Institutionally, it encourages the cooperation of various stakeholders in, among other things, innovation,. ty. finance and research (Mulligan, Tuzzolo, Stigge, & Guthrie, 2011). si. The Stakeholder Theory, an extension of the theory of management, is usually used to. ve r. identify the inter-connections between the stakeholders in the corporation (Wood, 1991). The stakeholder theory presents a model which illustrates the nature of the company. ni. (Brenner & Cochran, 1991). It describes the company as a place containing both. U. collaborative and competitive interests. Each member in the company pursue his/her intrinsic value. Instrumentally, the framework of the stakeholder theory can be used in evaluating the connections among the stakeholders (Donaldson & Dunfee, 1994). Normatively, the stakeholder theory involves the acceptance of the following ideas: the stakeholders are identified and classified by their interests and the interests are of their intrinsic value (Carroll, 1989).. 22.

(38) Many scholars have developed this theory and applied it to various projects. Araujo and Bramwell (1999), asserted that collaboration of both public and private organizations is needed to arrive at a common goal. The involvement of all the stakeholders and to ensure effective connections between them may bring a wide range of benefits and avoid the cost of resolving adversarial intra-stakeholder conflicts. Meanwhile, long-run the stakeholder theory can not only identify the key stakeholders and explain inter-organizational. a. relationships, but also guide the operation of such projects (Aas, Ladkin, & Fletcher, 2005;. ay. Bramwell & Sharman, 1999; Sautter & Leisen, 1999). Other researchers, examining the role of stakeholder theory in policy-making also suggested the adherence to stakeholder. al. principles was vital (Araujo & Bramwell, 2002; Jamal, 2004; Jamal & Stronza, 2009). In. M. evaluating the performance of private and public enterprises, Kaplan & Norton (2007) found that the effectiveness of institutional policies and management strategies owes. of. much to stakeholder consensus. They extended the traditional evaluation system by. ty. incorporating stakeholders’ involvement and participation.. si. As Carroll & Steane (2000) noted, public private partnership (PPP) can be explained. ve r. as ‘the collaboration that involves at least one public and one private as partnerships. This so called PPP theory framework was stated by DeSchepper, Dooms, & Haezendonck. ni. (2014) as: “the framework works only when at least two cooperate partners can be. U. observed, they are, the public initiators and private participators.” Hodge and Greve (2007) supported this explanation and pointed out the predominant areas in using PPP in examining project efficiency and effectiveness are: joint venture of government and private institutional; social infrastructure; civil society and community development; rural-urban re-development; and public-private social network. However, PPP theory suffers deficiencies when applied to analyze urban regimes (Mossberger & Stoker, 2001). Firstly, it neglected the vertical dimension of governance. 23.

(39) when it exclusively emphasized municipal level stakeholders. Secondly, much of what passed for PPP theory in the literature treated the private and public sectors as homogenous entities. In this regard, Debrie & Raimbault (2016), modified the theory by establishing a framework to show the interaction between sectoral and territory stakeholders within the urban space (Figure 2.1). According to the framework, the sectoral stakeholders consist of not only the accommodated firms and residences but also. a. the operation managers in infrastructure as well as regulators who monitor and evaluate. ay. the projects. In addition, territory stakeholders are embedded within the framework with. ve r. si. ty. of. M. al. different levels of public policies: municipal level, regional level and national level.. Figure 2. 1: Sector-Territory Framework Proposed by Debrie & Raimbault. ni. Source: abstract from Debrie & Raimbault (2016). U. Empirically, applying the PPP framework in assessing stakeholder collaboration in the Gwangju Project, Korea, Jung, Lee, Yap, & Ineson (2015) asserted it was clear the private. partners lacked opportunities for participation. Collaboration Theory was introduced by Hanneman (2002). It elaborated on the crucial role of collaborators in the planning and decision-making processes. According to collaboration theory, the participants are non-hierarchical in status and work towards the common goal while sharing responsibility and exchanging knowledge and expertise 24.

(40) (Sobandi & Sudarmadji, 2015). Himmelman (2002), who defined collaboration in a general form, described collaboration as cooperating and coordinating. The roles involved in collaboration were not mutually exclusive but integrated. He classified the roles as convener and organizer, capital funder, promoter and catalyst, community participators, technical supporter and implementer. The factors affecting collaboration was further identified by Carnwell and Carson (2005), and include joint venture, team. a. work, intellectual exchange, trust and respect, interdependency and cooperative endeavor.. ay. The Monocentric model describes the urban spatial structure in accordance with. al. neoclassical economic theory in which market forces were emphasized. The monocentric model was based on the bid rent theory, according to which, land use and land price are. M. determined by the economic activities that will pay the highest price (Alonso, 1960a;. of. Alonso, 1960b; Alonso, 1964). The bid rent curve for each economic activity was generated as a result of the tradeoff between the cost of land in that particular location. ty. and the cost of transportation from that particular location to the central business district. si. (CBD). Therefore, the bid curves vary according to the difference in land and. ve r. transportation costs. The economic activities with more steeply sloped and higherintercept bid rent curve are more likely to be located close to the CBD (Balchin, Bull,. ni. Kieve, & Balchin, 1995; Fujita, 1986; Jones, McGuire, & Witte, 1991). Thus the. U. monocentric model explains the spatial structure of a city, with business activities located in the city center, residential activities concentrated in the suburban area, manufacturing industries spread out on the outskirts and agriculture activities on the outermost sites. Numerous empirical studies accessing urban spatial structure have provided strong evidence to support the monocentric model. The independent research done by Chudzynska (1981) and Riley (1997) on the spatial structure of the retail industry in Warszawa, Lodz and London, found an distribution pattern of retail industries. The high-. 25.

(41) level retail stores tended to locate in the innermost city center, while the low level retail stores are located in its periphery. Meanwhile, a similar phenomenon was also found in the hospitality industry (Dunse, Jones, Brown, & Fraser, 2005; Egan & Nield, 2000). However, the monocentric model was also criticized by scholars for not taking into considerations non-market factors, including the transportation network and planning regulations (Archer & Smith, 2003; Bertaud & Brueckner, 2005; Hills & Schleicher,. al. 2.2.3 Theories Targeting Urban Development. ay. a. 2010).. M. Agglomeration economies accrue to urban centers. Agglomeration, as a spatial economics term, is employed to describe how specialized a region is (Long & Zhang,. of. 2011). Glaeser (1998) stresses that when several economic activities are clustered, it. ty. brings higher return in scale and lower mobility costs. The agglomeration economy also reduces the vulnerability of human resources to fluctuations in demand. The larger the. si. scale of agglomeration, the bigger the urban labor pool, thereby insulating the labor force. ve r. against unexpected changes in labor demand. As highlighted by Marshall (1920), the agglomeration of industrial activities allows firms to better access markets and suppliers,. ni. labor sources, and facilitates the easy flow of technological skills in the industrialization. U. process. The industrialization processes of Italy and Japan provided strong empirical evidence supporting this argument (Piore & Sabel, 1984; Porter, 1998; Sonobe & Otsuka, 2006). Further, Fujita, Krugman, and Venables (2001), stressed the significance of spatial. agglomeration of social activities in promoting regional development. Empirical studies have demonstrated the positive correlation between employment concentration and economic agglomeration effects. Employment density is one of the key factors affecting economic development. Ciccone and Hall (1993) found that doubling 26.

(42) employment density resulted in an improvement of productivity by 6%. Gabe (2004) asserted the industrial districts enhanced the density of employment by offering tremendous employment opportunities. Another source of agglomeration economies is the tourism cluster model. Tourism development is always emphasized by various cities, as seen in various documented trade strategies and development master plans. In this regard, how to build tourism. a. competitiveness is an area of interest, attracting considerable academic research. Porter’s. ay. Diamond Model is frequently employed to analyze tourism potential through. al. investigating supply and demand conditions, tourist industry strategies and level of industrial integration (Porter, 1990). The participation and coordination of small and. M. medium enterprises and institutions is often stressed. In line with Porter’s concept, Cunha. of. and Cunha (2005) detailed the elements of tourism competitiveness, namely geographical location, culture, management, advertising, and supporting infrastructure. The tourism. ty. cluster conceptualized by Cunha was a spatially concentrated group of institutions and. si. companies among which information can be exchanged. Kim and Wicks (2010) claimed. ve r. that the success of an effective tourism cluster was determined by the existence of a transnational corporation, integration of cluster participants and the hierarchy system of. ni. participant business. They further argued that collaboration of one or more universities is. U. necessity to come up with innovations to improve tourism attractiveness. The effectiveness of agglomeration economies in regional development has been criticized by scholars in terms of its adverse consequences for social stability. Anas and. Kim (1996) argued that agglomeration economy seriously affected the habitat environment. As congestion rises with the population density, the resources (i.e. infrastructure and public facilities) per capita decrease. Therefore it forces more capital. 27.

Rujukan

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