Abstract: Understanding Economic Development in Modern China: The Interplay of the State, the Market, and the Social Sector

C. H. Tzeng

Abstract

I propose to explore the interplay of the state, the market, and the social sector in the growth of indigenous firms in the economic development process. From the 1960s to the early 1990s, scholars were debating the roles of the state and the market in economic development. And by the late 1990s, the social sector entered the debate more seriously. But a tendency remains to argue that either the state (e.g., Amsden, 1989; Evans, 1995), or the market (e.g., Lal, 2000), or the social sector (e.g., Makoba, 2002) is the key to economic development, rather than all three working in concert. Furthermore, scholars tend to focus on the macroeconomic output (e.g., GNP) rather than on the microeconomic level (such as the growth of indigenous firms). In this research, I focus on the level of analysis of the firm and ask three research questions. First, what is the interplay of the three sectors in the economic development? Second, under what conditions do the three sectors work together to grow firms? Third, what is the division of labor among the three sectors? Following Lazonick (1990), I will analyze the comparative-historical experiences of three firms in each of socialist China and capitalist Taiwan: in China, Legend Computer, Great Wall Computer, and the Advanced Technology Service Department; in Taiwan, Acer Computer, United Microelectronics Company (UMC), and Vanguard International Semiconductor (VIS). These firms draw my attention because of their differences. First, Chinese firms and Taiwanese firms operate in contrary economic systems: socialist China and capitalist Taiwan. Second, these six firms were started up either by the state (Great Wall), a public research institute in the social sector (China's Legend and Taiwan's UMC and VIS), or techno-entrepreneurs in the market (China's Advanced Technology Service Department and Taiwan's Acer). Third, three of the firms are successful: China's Legend, Taiwan's Acer and UMC; the other three are unsuccessful. To study these six firms, I will use information from personal interviews with managers (or others) and from secondary sources, including trade and business magazines, business and general newspapers, academic magazines and journals, annual reports, and other publications of the organizations.

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