China's collective township-village enterprises and economies of specialisation

This paper draws on the new classical notion of economies of specialisation to tackle the puzzle of why collective township and village enterprises (CTVEs) have been successful over a sustained period. Many CTVEs have become highly specialised regional producers of specific commodities within enterprise groups. We argue that economies of specialisation stressed in the new classical literature appears consistent with the continued strong showing of CTVEs in the second half of the 1980s and throughout most of the 1990s in spite of severe capital and tabour shortages.