Strengthening China's Technological Capability

Abstract

China is increasing its outlay on research and development and seeking to build an innovation system that will deliver quick results not just in absorbing technology but also in pushing the technological envelope. China's spending on R&D rose from 1.1 percent of GDP in 2000 to 1.3 percent of GDP in 2005. On a purchasing power parity basis, China's research outlay was among the world's highest, far greater than that of Brazil, India, or Mexico. Chinese firms are active in the fields of biotechnology, pharmaceuticals, alternative energy sources, and nanotechnology. This surge in spending has been parallel by a sharp increase in patent applications in China, with the bulk of the patents registered in the areas of electronics, information technology, and telecoms. However, of the almost 50,000This paper-a product of the Development Research Group-is part of a larger effort in the department to analyze innovation systems in East Asia. Policy Research Working Papers are also posted on the Web at http://econ.worldbank. org. The author may be contacted at syusuf@worldbank.org. patents granted in China, nearly two-thirds were to nonresidents.This paper considers two questions that are especially important for China. First, how might China go about accelerating technology development? Second, what measures could most cost-effectively deliver the desired outcomes? It concludes that although the level of financing for R&D is certainly important, technological advance is closely keyed to absorptive capacity which is a function of the volume and quality of talent and the depth as well as the heterogeneity of research experience. It is also a function of how companies maximize the commercial benefits of research and development, and the coordination of research with production and marketing.

"Fostering Indigenous Innovation Capacities": The Development of Biotechnology in Shanghai's Zhangjiang High-Tech Park

“…Most previous studies on China's innovation have been conducted at the national level (e.g., Liu and White, 2001;Motohashi, 2006;Yusuf and Nabeshima, 2007). Although the Information and Communications Technology (ICT) sector has been extensively studied (Sun et al, 2006;Walsh, 2007), much less attention has been paid to the biotech sector (Zhang et al, 2011).…”

Betting on indigenous innovation or relying on FDI: The Chinese strategy for catching-up

“…By 2006, China had become the fourth-largest economy in the world and the third-largest trading nation [50]. Given the growing consensus about the centrality of scientific and technological advances in driving economic growth and progress, and considering that increasing national investment in innovation is essential to ensure a country's economic growth, the promotion of innovation has now begun to appear on the policy agendas of developing countries, and among them of China [6,8].…”

“…"The experiences of Japan suggest that catching-up might be the easier part. Becoming a serial innovator is far more demanding" [50].…”

Service Sector and Technological Developments

“…Reverse engineering and lerning by doing will be easier due to the fact that limited number of trial and error acts is enough in imitation stage. However, it is difficult to produce new information and to use it in producing services and goods through the said method (Kim 2000:11-13;Yusuf and Kaoru, 2007).…”