Local industrial policies and development of agricultural clusters: a case study based on a tea cluster in China

Abstract

The purpose of this study is to discuss the effectiveness of local industrial policies and show that effective industrial policies contribute to both the evolution and development of the cluster in the Chinese context, based on comparative advantages and market failures. We adopted a single case study method and conducted interviews with 30 stakeholders in the tea clusters; a documentary investigation was also used as a supplement. This case study finds that local industrial policies have played an important role when market failures occur in the development of agricultural clusters. The local government implemented a series of industrial policies to promote the progress of the tea industry at various stages of development. The case study further demonstrates what can be considered as an effective industrial policy in the dynamic process of agricultural development. This case also provides empirical evidence for local governments to remain sensitive to challenges and to develop timely industrial policies when an industrial cluster is faced with either opportunities or crises. Therefore, it has implications for local governments that need to improve agriculture in undeveloped regions.