Credit constraints, organizational choice, and returns to capital: Evidence from a rural industrial cluster in China
Traditional economic theory posits that a well-functioning capital market is a necessary condition for industrialization and economic growth. In reality, micro and small enterprises are ubiquitous because entrepreneurs can undertake low-return activities with minimal barriers to entry. Using a cashm...
| Autores principales: | , |
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| Formato: | Artículo preliminar |
| Lenguaje: | Inglés |
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International Food Policy Research Institute
2008
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| Materias: | |
| Acceso en línea: | https://hdl.handle.net/10568/161482 |
| _version_ | 1855519043852697600 |
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| author | Ruan, Jianqing Zhang, Xiaobo |
| author_browse | Ruan, Jianqing Zhang, Xiaobo |
| author_facet | Ruan, Jianqing Zhang, Xiaobo |
| author_sort | Ruan, Jianqing |
| collection | Repository of Agricultural Research Outputs (CGSpace) |
| description | Traditional economic theory posits that a well-functioning capital market is a necessary condition for industrialization and economic growth. In reality, micro and small enterprises are ubiquitous because entrepreneurs can undertake low-return activities with minimal barriers to entry. Using a cashmere sweater cluster in China as an example, this paper shows that organizational choice can overcome the prohibitive cost of investment. When facing credit constraints, firms are more likely to concentrate in divisible production technologies in the form of industrial clusters. Within clusters, a vertically-integrated production process can be decomposed into many small incremental stages that are more accessible for the small entrepreneurs widely available in rural China, thereby supporting industrialization even in the absence of a well-functioning capital market. The observed rate of returns to capital is closely related to the organizational choice under credit constraints. |
| format | Artículo preliminar |
| id | CGSpace161482 |
| institution | CGIAR Consortium |
| language | Inglés |
| publishDate | 2008 |
| publishDateRange | 2008 |
| publishDateSort | 2008 |
| publisher | International Food Policy Research Institute |
| publisherStr | International Food Policy Research Institute |
| record_format | dspace |
| spelling | CGSpace1614822025-11-06T05:37:47Z Credit constraints, organizational choice, and returns to capital: Evidence from a rural industrial cluster in China Ruan, Jianqing Zhang, Xiaobo industrialization entrepreneurship credit organizational learning Traditional economic theory posits that a well-functioning capital market is a necessary condition for industrialization and economic growth. In reality, micro and small enterprises are ubiquitous because entrepreneurs can undertake low-return activities with minimal barriers to entry. Using a cashmere sweater cluster in China as an example, this paper shows that organizational choice can overcome the prohibitive cost of investment. When facing credit constraints, firms are more likely to concentrate in divisible production technologies in the form of industrial clusters. Within clusters, a vertically-integrated production process can be decomposed into many small incremental stages that are more accessible for the small entrepreneurs widely available in rural China, thereby supporting industrialization even in the absence of a well-functioning capital market. The observed rate of returns to capital is closely related to the organizational choice under credit constraints. 2008 2024-11-21T09:56:00Z 2024-11-21T09:56:00Z Working Paper https://hdl.handle.net/10568/161482 en https://doi.org/10.1002/jsc.1901 Open Access application/pdf International Food Policy Research Institute Ruan, Jianqing; Zhang, Xiaobo. 2008. Credit constraints, organizational choice, and returns to capital. IFPRI Discussion Paper 830. https://hdl.handle.net/10568/161482 |
| spellingShingle | industrialization entrepreneurship credit organizational learning Ruan, Jianqing Zhang, Xiaobo Credit constraints, organizational choice, and returns to capital: Evidence from a rural industrial cluster in China |
| title | Credit constraints, organizational choice, and returns to capital: Evidence from a rural industrial cluster in China |
| title_full | Credit constraints, organizational choice, and returns to capital: Evidence from a rural industrial cluster in China |
| title_fullStr | Credit constraints, organizational choice, and returns to capital: Evidence from a rural industrial cluster in China |
| title_full_unstemmed | Credit constraints, organizational choice, and returns to capital: Evidence from a rural industrial cluster in China |
| title_short | Credit constraints, organizational choice, and returns to capital: Evidence from a rural industrial cluster in China |
| title_sort | credit constraints organizational choice and returns to capital evidence from a rural industrial cluster in china |
| topic | industrialization entrepreneurship credit organizational learning |
| url | https://hdl.handle.net/10568/161482 |
| work_keys_str_mv | AT ruanjianqing creditconstraintsorganizationalchoiceandreturnstocapitalevidencefromaruralindustrialclusterinchina AT zhangxiaobo creditconstraintsorganizationalchoiceandreturnstocapitalevidencefromaruralindustrialclusterinchina |