CHAPTER 1
Conception Definition of Industrial Clusters
In a national economic system, extensive, complicated, and close economic links exist
among industries. In industrial clusters, industries with close economic links come into
being. The complication and diversification of economic links among industries generates
external economies, which are the bases of regional growth and development. When many
industries with close economic links form industrial clusters with each other, it provides
a favorable development environment for a regional self-support growth process. Regional
economic activities can attract the inflow of production factors from outside regions so
that new productive activities can be introduced, production chains can be extended, and
multiplier effects of regional productive activities can be remarkably heightened. With
further development of regional industrial clusters, multiplier effects become quite strong,
and rapid economic growth process accompanies the change in economic structures.
Although academe in China has conducted large numbers of theoretical and empirical
studies about industrial clusters, so far there is not an acknowledged concept of industrial
clusters, and a systemic study about industrial clusters in the national economy has not
been conducted. The terminology relative to industrial clusters is industrial cluster, indus-
trial pile-up, industrial clustering, industrial agglomeration, industrial combo, and regional
production complex. The confusion of terms relative to industrial clusters has impeded its
research.
1.1 BASIC CONCEPT OF INDUSTRIAL CLUSTERS
Industries are a phenomenon of the social division of labor and are generated and
developed along with this social division of labor. The result of three major divisions of
labor has been forming industrial sectors such as agriculture, stockbreeding, the handicraft
industry, and business. Economic links among industries are from inexistence to existence,
from the links among sectors of intra-industries to the links among sectors of inter-industries,
from simple to complicated, from unidirectional and linear to multidirectional and network.
This accelerates the development and change of industrial organization, industrial structure,
and spatial structure.
With the development of social productive forces and the progress of production tech-
nologies, the internal division of labor of industries is further built up, and new industrial
sectors are constantly emerging. In the 1760s, Industrial Revolution I began in Britain and
mainly facilitated the development of light and the textile industrial sectors. Industrial
Revolution II in the early 1900s saw unprecedented development with heavy industries be-
ginning with iron and steel, petroleum, and chemical industries. Industrial Revolution III
in the 1950s placed information technology within realms such as agriculture, industry, and
the service industry to be extensively used, and many industrial sectors rapidly came forth.
Links among industries developed from unidirectional to multidirectional, and from linear
to network, and the extent and depth of functional links among industries are continually
increasing.
In the process of industrial development, each industry as the main body of social
economic activities follows the basic laws of economics, having lower transaction costs and
the maximization of market benefits as the main goals. Each industry develops from relying
mainly on internal scale and scope economies to external scale and scope economies so as