The diffusion and embeddedness of innovative activities in China

Abstract

China's unprecedented growth largely results from industrial development having critically sustained the country's economic transition after 1978. As common to the developmental context, catching-up capabilities have been both absorbed from external sources and generated by indigenous activities. These also represent exogenous and endogenous seeds of innovative activities respectively. The relative emphasis on the two has evolved over progressive industrialization-transition stages in China, leading the country to grow a global manufacturing hub. The volume and quality of innovative activities has however resulted unevenly distributed at a local level. Literature considers embeddedness, in particular, as one of the key features in the development of the local innovative environment. This paper investigates if the mixes of seeds may have delayed the innovative activities to gain embeddedness along their diffusion in the Chinese prefectural cities. In a great deal of stylization and methodological design, innovative activities are here approximated by the applications to the European Patent Office from China collected in the OECD REGPAT database as originally rearranged by the applicant's and inventor's prefectural locations. These locations are taken to build three indicators to be combined in a clustering procedure set to measure separate levels of embeddedness. The results suggest a growing diffusion and embeddedness of the innovative activities in the Chinese prefectural cities since the early-2000s, despite they remain highly concentrated in some regions, that is, mainly those having historically hosted the Special Economic Zones where more exogenous seeds appear to have actually delayed the innovative activities to gain embeddedness.

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