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Innovation capacity and economic development: China and India

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  • Peilei Fan

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Abstract

Decomposing the GDP growth from 1981 to 2004, this paper finds that innovation capacity has contributed significantly to the economic growth of China and India, especially in the 1990 s. Outputs of the national innovation system, measured by patents and high-tech/service exports, demonstrate the considerable progress China and India have made in innovation capacity. The enhanced innovation capacity of China and India is primarily due to their heavy investment in the inputs of innovation system, i.e., R&D expenditure and R&D personnel, in recent decades. This paper emphasizes the role that the governments have played in promoting innovation capacity and their contribution to economic development. Both governments have transformed their national innovation systems through linking the science sector with the business sector, providing incentives for innovation activities, and balancing import of technology and indigenous R&D effort. Using case studies of domestic biotech firms in China and India, this paper also offers micro-level insights on innovation capacity and economic development: (1) innovation capacity has become essential for domestic firms’ market success and (2) global institutional factors and national government policies on innovation have considerable influence on the choice of innovation at the firm level, i.e., to conduct indigenous R&D or to import foreign technology. Copyright UNU-WIDER 2011

Suggested Citation

  • Peilei Fan, 2011. "Innovation capacity and economic development: China and India," Economic Change and Restructuring, Springer, vol. 44(1), pages 49-73, April.
  • Handle: RePEc:kap:ecopln:v:44:y:2011:i:1:p:49-73
    DOI: 10.1007/s10644-010-9088-2
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. John Bailey Jones & Sohini Sahu, 2017. "Transition accounting for India in a multi-sector dynamic general equilibrium model," Economic Change and Restructuring, Springer, vol. 50(4), pages 299-339, November.
    2. Anil Nair & Orhun Guldiken & Stav Fainshmidt & Amir Pezeshkan, 2015. "Innovation in India: A review of past research and future directions," Asia Pacific Journal of Management, Springer, vol. 32(4), pages 925-958, December.
    3. repec:eee:phsmap:v:481:y:2017:i:c:p:141-145 is not listed on IDEAS
    4. Mahendra Kumar Pallapothu & Gary Evans, 2013. "Gauging the Market and Non-Market Forces in Indian Aquaculture Industry for a Strategic Position in Fish Vaccines Market," Journal of Management and Strategy, Journal of Management and Strategy, Sciedu Press, vol. 4(1), pages 41-61, February.
    5. repec:spr:jknowl:v:8:y:2017:i:1:d:10.1007_s13132-016-0362-z is not listed on IDEAS

    More about this item

    Keywords

    China; India; Innovation capability; Domestic firms; ICT; Biotech; O31; O3; L65;

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • L65 - Industrial Organization - - Industry Studies: Manufacturing - - - Chemicals; Rubber; Drugs; Biotechnology; Plastics

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