SOAS Research Online

Abstract

This thesis is divided into two parts. The first explores China's development trajectory and progress in industrial upgrading, as well as the development experiences and obstacles faced by Latin American countries. The second part focuses on Mexico and the Chinese province of Guangdong as case studies within the automotive industry. The analysis is guided by two main questions. First, what are the main differences between the strategic planning and policy implementation of the Chinese and Latin American governments in fostering innovation, industrial upgrading, and managing the roles of corporations such as State-owned Enterprises (SOEs) and Multinational Enterprises (MNEs)? Second, how do the contributions of Foreign Direct Investment (FDI) to innovation and technological advancements in Guangdong's automotive industry compare to those in Mexico, and what roles have governments and corporations played in facilitating or hindering this process? To address these inquiries, this investigation proposes a comparative study, beginning with an analysis of China’s developmental evolution from the inception of its economic liberalization to the present day. This first stage seeks to explore the Chinese trajectory from a theoretical perspective. The aim is to define the guidelines of the China model through a multidisciplinary study that connects and evaluates the role of the State, local governments, corporate organizations —such as SOEs and MNEs—, industrial upgrading, indigenous innovation, and FDI. The main goal is to extract possible lessons from China’s experience to encourage industrial advancement in Mexico and other Latin American countries. This comparative research will be mainly qualitative, following a Political Economy of Development approach. It will employ secondary sources, examining official reports from governmental agencies, and international organizations. While predominantly qualitative, this research will also include some quantitative analysis. In that case, the necessary data will be gathered from the Guangdong Statistical Yearbooks, the World Development Indicators (WDI), and the data provided by Mexico’s government, such as its National Institute of Statistics and Geography (INEGI). From the analysis, it was possible to extract eight insights that serve three functions: illustrating the lessons that can be drawn from China, underscoring the key differences between both cases and encapsulating the elements that characterize the Chinese development model. The first insight is China's mixed and flexible model, which allows the coexistence of MNEs and national firms. The second insight involves governing the key information of MNEs and acting as knowledge integrators. It also includes exercising strategic control. The third insight is China's innovation-centered approach, which emphasizes the importance of fostering technological advancements and innovative activities. The fourth insight is the significance of human capital, particularly the spillover effects and the poaching of high-skilled workers. The fifth insight is the role of the government as a counterbalancing force of the market. The sixth insight highlights the relevance of productive investment and industrial upgrading in the development process. The seventh insight emphasizes a gradual transition from a comparative advantage centered on labor to a capital-deepening path. Finally, the eighth insight explains the significance of regional clusters, the emergence of region-specific supply chains, and the development of the auto parts sector.