New Information and Communication Technologies and Local Clustering of Firms: A Case Study of the Xingwang Industrial Park in Beijing

Abstract

Recent advances in telecommunications technologies have initiated debates on the changing balance between centralizing and decentralizing forces driving economic activities. The literature reveals that new information and telecommunication technologies (ICTs) have been driving new economic activities into a number of cities and regions with well-developed information infrastructures while within these cities and regions new industries tend to disperse as a result of the safe and sufficient communications across distance enabled by new ICTs. This finding suggests that the application of new ICTs is a strong decentralizing force in a firm's location at the local scale. It is against such a background that this paper examines the Xingwang Industrial Park located in the Beijing Economic and Technological Development Area (BDA) as a case study to focus on the dynamics of local industrial clusters enabled by new ICTs. The authors argue that new ICTs are an enabling or facilitating agent rather than a deterministic force. The application of new ICTs tends to lead to a "virtual clustering" of firms as this is an essential step of integration of supply chains while whether or not suppliers choose to locate in proximity to each other and to assemblers depends on a number of other factors.