Acta Geographica Sinica ›› 2020, Vol. 75 ›› Issue (12): 2684-2698.doi: 10.11821/dlxb202012010

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The principle of relatedness in China's regional industrial development

HE Canfei1,2(), ZHU Shengjun1   

  1. 1. School of Urban and Environmental Sciences, Peking University, Beijing 100871, China
    2. Peking University-Lincoln Institute Center for Urban Development and Land Policy, Beijing 100871, China
  • Received:2019-11-06 Revised:2020-11-22 Online:2020-12-25 Published:2021-02-25
  • Supported by:
    Key Program of National Natural Science Foundation of China(41731278);The National Science Fund for Distinguished Young Scholars(41425001);National Natural Science Foundation of China(41971154);Youth Program of National Natural Science Foundation of China(41701115)


Geographical distribution and agglomeration of industries have been a long lasting concern of economic geographers. Some studies have stressed geographical proximity and industrial agglomeration as the key driving force of uneven distribution of industries. Recently, evolutionary economic geography, based on evolutionary economics, has adopted a dynamic and historic perspective to study the evolution of regional industrial dynamics. It argues that geographical proximity is neither sufficient nor necessary for efficient knowledge spillovers; instead, it calls for more attention to the idea of cognitive proximity as well as its importance in regional industrial dynamics. The idea is that for knowledge spillovers to take place effectively, some kind of cognitive proximity in terms of shared competencies must be in place. Inspired by this, we examine China's regional industrial development through the lens of cognitive proximity, and propose the "principle of relatedness", that is, the probability of a region to enter/exit one specific economic activity is heavily dependent on regional pre-existing economic profile and local knowledge base. This paper first introduces some key, relevant concepts, and then reviews empirical studies that are underpinned by the "principle of relatedness". Furthermore, it discusses the applicability of "principle of relatedness" in the Chinese context. Our main findings are as follows: (1) theories on resource base view and knowledge spillovers both support the existence of the "principle of relatedness"; (2) the "principle of relatedness" enables us to better understand China's regional economic development, innovation and resilience; however, (3) the effectiveness of the "principle of relatedness" may be compromised by external shocks and internal institutions. One policy implication from the "principle of relatedness" as well as our empirical research is that Chinese regions should seek to diversify related industries and enhance related variety of their regional profiles. In doing so, they are able to become more economically resilient and achieve more sustainable economic development.

Key words: cognitive proximity, principle of relatedness, industrial relatedness, evolutionary economic geography, China