Industry Development, Space Limitation, and Industry Transformation: Evidence from Wenzhou

This study explored the reason why the development of the Wenzhou economy, which is known as the “Wenzhou Model”, has slowed down. Traditional research emphasized the effects of limitations from soft and hard environments, such as environment, resources, and capital. Built on acknowledging the factors mentioned above, the current study especially proved that there was limited development space for certain early-entered industries, that is, it became unrealistic for accelerating the development of certain industries after the industrial clusters in this area have occupied the most market share in China, even the whole world, which becomes the crux point to lead to the lag of the development of Wenzhou economy. The study first established a theoretical model for illustrating ideas delivered here and then proved the basic ideas in the model through analyzing materials and data collected through survey among Wenzhou industrial clusters. The conclusion subsequently followed.