Industrial Takeoff and the Structural Phase-Transition Hypothesis: From Localized Production Chains to Reroutable Ecologies
Year: 2026
Type: article
Abstract: Why do some industrial parks remain fragile even after they accumulate large plants, many suppliers, and high local content, while others begin to behave like self-reinforcing production ecologies? This paper develops a structural phase-transition hypothesis: localized production can occupy qualitatively distinct structural states, although the present cases cannot distinguish a discontinuous threshold from a smooth but substantively important maturation process. The proposed structure is nested. A locality must first achieve Functional Sufficiency (F): enough critical productive functions are meaningfully available for an operating local chain to exist. Conditional on that foundation, the more consequential distinction is whether local capabilities are already used across multiple independently controlled routes, captured as pre-shock Network/Route Activation (A). The empirical purpose is theory-building and existence demonstration rather than causal-effect estimation. Six cases from TFT-LCD and automobile production are organized as lower bounds, high near-misses, an intermediate transition case, and a high-activation case. Shanghai Xinzhuang and Camaçari show that substantial localization can coexist with narrow route structures; Tainan provides an intermediate multi-core case; and Sanand provides the clearest high-activation case with two local cores, multi-OEM supplier behavior, and multi-product production before Ford's exit. The cleanest Stage-2 contrast is therefore Camaçari versus Sanand, and the paper states this dependence explicitly. Later shocks are used as revealed-state diagnostics, not as independent causal validation. A two-stage outcome-blind coding audit supports reproducibility of the revised coding rules, but the codebook was revised after the first coder exposed ambiguities and the audit is not an independent test sample. The evidence supports a qualitative structural-regime distinction consistent with the phase-transition hypothesis; it does not yet establish nonlinearity or locate an empirical critical band. The policy implication is diagnostic: managers should not equate more firms or higher local content with takeoff, and once functional depth is sufficient they should monitor actual cross-firm route activation rather than assuming that further vertical deepening is the only relevant margin.
Author: Wang, Kai
Language: English
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W7204459279
FWCI:
Cites:
Cited by:
Related to: