Synergy, Innovation and Formation of Industrial Clusters: A Case Study from Shanxiahu, China

Industrial cluster reflects a course of China economic development from 1980s, and it is especially observed in the rural area of China, which offers an explanation why since the 1980s some Chinese industries are so competitive in the world, as well as suggests successful model for inclusive development in China that allows people to highly participate in, and meanwhile to benefit from. This paper mainly focuses on the case of a freshwater pearl industrial cluster in Shanxiahu town of Zhejiang, China, which clearly demonstrates the evolution course of this industrial cluster, characteristics of its innovation and the agents of the industrial cluster formation. It is proved that the synergy of entrepreneurs in both public and private sectors and their ability of innovation are key drives on the success of industrial clusters. And the ability of local government to promote and sustain entrepreneurship and incentives to reconfigure resources to adapt to changing circumstances yields long-term economic growth, regardless of geographic scale. 1 This is a working paper as interim results of “Innovation Systems for Inclusive Development: Lessons from Rural China and India”, funded by International Development Research Center (IDRC). PDF created with pdfFactory Pro trial version www.pdffactory.com