Assessing Synergies, Linkages and the Role of Hainan Special Economic Zone in Development of Natural Rubber Ecosystem

Abstract

China has successfully created value and wealth, by integrating its industrial and technological development with Global Value Chains through deployment of economic zones. This paper looks at Hainan Special Economic Zone (‘HSEZ’), which was established as the largest special economic zone in China and has grown into second largest contributor of Natural Rubber (‘NR’) production in China. HSEZ has played a key role in design and development of socio-economic policies by acting as a ‘greenhouse’ to test these policies, and in process delivering extraordinary results. The application of triple helix structure to design policies, utilize institutions and implement initiatives by the HSEZ has allowed it to develop some key clusters within the zone where NR ecosystem is regarded as a great accomplishment. This paper identifies the output variables for socio-economic impact rendered by the HSEZ, and output variables of the local NR ecosystem. It then correlates and regresses them to gain insight on the synergies and linkages between the HSEZ’s vibrant environment and the local NR ecosystem. It also looks into new technologies and innovations that are being diffused from universities and research centers with the help of the private sector, under liberal but protective regulations instituted by the government agencies, and seamlessly flowing into the local NR ecosystem. These innovations are helping to address challenges and transforming this traditional but strategic agricultural industry in China, thereby opening venues for its growth and sustainability. This study builds up on primary data collected from visit to the province, discussions with stakeholders in Hainan and analysis of secondary data from various public sources. The results show that HSEZ, has successfully created a ‘collaborative and conducive environment’ that binds key ingredients of the natural rubber ecosystem together. On one hand, NR based entrepreneurial ecosystem has formed significant linkages within the HSEZ thereby influencing its gross regional product, government revenue, employment, investments, trade and innovation. On the other hand, NR based entrepreneurial ecosystem retains its uniqueness, and strengthens its contribution to the global and regional trade supply chains.

Keywords: Trade & Environment, Government Policy, Agriculture, Technological Change

JEL: F18, L78, O13, O33