ABSTRACT
The second-tier extended metropolis in the Yangtze River Delta, including Suzhou, Wuxi and Changzhou near Shanghai, is becoming the most active and innovative of the new areas of industrial agglomeration. Manufacturing industries in these second-tier cities have been experiencing rapid growth due to increasing foreign direct investment (FDI). Nevertheless, the economic prospects of these cities are still constrained due to a lack of local R&D capacity and producer services and a continuing dependence upon those of Shanghai. This chapter analyses the impact of globalization on the new economic sectors in these cities, the changing industrial structure and the limitations of urban development and the problem of sustainability. It also analyses the conditions for high-tech industry and producer services in these areas. Furthermore, the chapter applies industrial organization theory to these cities and examines how they can cooperate with each other in terms of horizontal linkages. Finally, it discusses the future growth prospects of these industries.
