Abstract

Abstract:

While it is widely agreed that local governments played a critical role in infrastructure building and industrial development in China—the key factors in its “economic miracle”—the relationship between local government entrepreneurship and the development of specialised markets through which products made in China are marketed to buyers worldwide is however not well understood. This article focuses on the rapid evolution of what is now the world’s largest wholesale market—the Yiwu Wholesale Market for Consumer Goods (Yiwu Market) in Zhejiang province—and the key role played by local government at different junctures in its formation, development and continual upgrading. The fact that a global commerce hub such as Yiwu Market arose in an area with no discernible natural competitive advantage indicates that many prevailing theories on competitive advantage in locational decision-making may have overlooked the central role local governments played in catalysing local economic development. This analysis underlines the fact that local government entrepreneurship can be a major source of competitive advantage for firms.

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