Capital accumulation and the information industries of mainland China

Analysts associate Chinese economic development with the movement of firms seeking the lowest wages available worldwide. However, firms in the information industries transfer innovation and capital to mainland China, even when they are threatened with fines for violating United States and Taiwanese restrictions on the movement of sensitive technologies to communist countries. Theories of comparative advantage have no way to explain what motivates firms to transfer sensitive technologies to a nation with a comparative advantage for low wages. Neither do theories of the developmental state explain this. Chinese development policies appear to have successfully attracted foreign firms of the semiconductor sector. However, parallel policies to attract programming activities have not succeeded, though the sensitivity of programming firms to wages should make this sector the most likely sector to move to China. Theories that attribute development to the state do not explain how a state could effectively develop the semiconductor sector and not programming.; To explain these dynamics, this dissertation turns to theories of the world system. At this stage of its systemic cycles of accumulation, the world system is experiencing a crisis of overaccumulation. Falling rates of profit motivate firms to seek new markets, and the size of the market draws attention to China. It is to take advantage of this emerging market that hardware and semiconductor firms establish themselves in China. Likewise, it is the limits of the market for programming in China that explain the modest movement of that sector.; To further explain the movement of sensitive technologies, this dissertation considers the influence of firm networks on tech transfers. Mainland China and Taiwan have experienced different patterns of development as a result of the market opportunities they offer firms. However, mainland China and Taiwan share a dependency on foreign firms and technologies. Firms from core countries continue to control tech transfers. They outsource innovation only where they are able to restrict the development of their outsourcing partners to contain the effects of outsourcing on their profits. Thus, dependency continues to define development in mainland China and Taiwan and tends to preserve the economic order of the world system.