Our analysis of China’s path to indigenous innovation focuses on the interaction of the “innovative enterprise” and the “developmental state”.
In the development process, the state takes a leading role by investing in a) physical infrastructure directly and/or subsidizing business enterprises to do so, and b) the nation’s knowledge base by educating the future labor force and funding the accumulation of science and technology capabilities.
These investments in turn make it possible for business enterprises to invest in plant and equipment, training of the labor force, and research and development.
Government agencies and business enterprises will often work together to transfer advanced technologies from abroad through licensing, joint ventures, and other types of collaborations with foreign partners. In addition, once the development process is well underway, well-educated nationals who, often decades earlier, had emigrated for higher degrees and work experience in advanced economies choose to return to their homelands, transforming a brain drain into brain gain.
“China’s Path to Indigenous Innovation” documents this development process, from infrastructural investments in steel, roads, communications networks, and energy grids to serve the national economy to innovative investments in products such as consumer durables, information technology. communications equipment, transportation equipment, and electronic components that can be sold both at home and abroad.
Over time, with the help of experts on China in academia, industry, and government, our aim is to document fully this development process. To help guide the process of knowledge accumulation, we have written a working paper, “China’s Path to Indigenous Innovation” that we will update and modify over time. We welcome your comments and criticisms.