Creating ladders out of chains : China's technological development in a world of global production

With the advent of economic globalization, the terms of debate over the political and social conditions necessary to foster development in the Global South have shifted. Examining technological development, one important aspect of economic development, in China, I explore the prospects for and conditions conducive to development under globalization. My main finding is that the developing world has significant opportunities for development through combining the institutions of global capital, defined here as the financial institutions of the advanced economies, with co-ethnic technologists returning from abroad. Global capital serves to ameliorate the inefficiencies of China's financial sector. The co-ethnic technologists establish hybrid firms that possess foreign finance and a strategic commitment to develop core technological activities in China, a strategic orientation commonly associated with domestic firms and not foreign ones. I call this developmental path the global hybrid model. Using two case studies from China's IT industry, I demonstrate that the hybrid firms outperform both other foreign-invested enterprises and domestic firms in technological upgrading.