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Technological innovation policy in China: the lessons, and the necessary changes ahead

Author

Listed:
  • Xiaolan Fu

    (University of Oxford)

  • Wing Thye Woo

    () (University of California, Davis
    Sunway University
    Fudan University)

  • Jun Hou

    (University of Oxford)

Abstract

Abstract China has now moved considerably away from being an imitative latecomer to technology toward to being an innovation-driven economy. The key lessons from China’s experience are that (1) there is synergy between External Knowledge and Indigenous Innovation because the process of learning the tacit knowledge required in using the foreign technology fully is made easier by strong in-house R&D capability; (2) the open innovation approach is very important because it allows multiple driving forces—the state, the private sector and MNEs—with each playing a changing role over time; and (3) the commencement of foreign technology transfer and investment in indigenous innovation should go hand in hand. Without the numerous well-funded programs to build up the innovation infrastructure to increase the absorptive capacity of Chinese firms, foreign technology would have remained static technology embedded in imported machines and would not have strengthened indigenous technological capability. However, China could still end up in the middle-income trap, unless it undertakes a series of critical reforms in its innovation regime in order to keep moving up growth trajectories that are increasingly skill-intensive and technology-intensive.

Suggested Citation

  • Xiaolan Fu & Wing Thye Woo & Jun Hou, 2016. "Technological innovation policy in China: the lessons, and the necessary changes ahead," Economic Change and Restructuring, Springer, vol. 49(2), pages 139-157, August.
  • Handle: RePEc:kap:ecopln:v:49:y:2016:i:2:d:10.1007_s10644-016-9186-x
    DOI: 10.1007/s10644-016-9186-x
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    References listed on IDEAS

    as
    1. Xiaolan Fu, 2008. "Foreign Direct Investment, Absorptive Capacity and Regional Innovation Capabilities: Evidence from China," Oxford Development Studies, Taylor & Francis Journals, vol. 36(1), pages 89-110.
    2. Li, Xibao, 2011. "Sources of External Technology, Absorptive Capacity, and Innovation Capability in Chinese State-Owned High-Tech Enterprises," World Development, Elsevier, vol. 39(7), pages 1240-1248, July.
    3. Franco, Eliane & Ray, Sangeeta & Ray, Pradeep Kanta, 2011. "Patterns of Innovation Practices of Multinational-affiliates in Emerging Economies: Evidences from Brazil and India," World Development, Elsevier, vol. 39(7), pages 1249-1260, July.
    4. Wing Thye Woo, 2012. "China meets the middle-income trap: the large potholes in the road to catching-up," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 10(4), pages 313-336, August.
    5. Cohen, Wesley M & Levinthal, Daniel A, 1989. "Innovation and Learning: The Two Faces of R&D," Economic Journal, Royal Economic Society, vol. 99(397), pages 569-596, September.
    6. Woo, Wing Thye, 1990. "The art of economic development: markets, politics, and externalities," International Organization, Cambridge University Press, vol. 44(03), pages 403-429, June.
    7. Atkinson, Anthony B & Stiglitz, Joseph E, 1969. "A New View of Technological Change," Economic Journal, Royal Economic Society, vol. 79(315), pages 573-578, September.
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    1. repec:kap:ecopln:v:51:y:2018:i:1:d:10.1007_s10644-016-9194-x is not listed on IDEAS
    2. repec:spr:epolit:v:35:y:2018:i:1:d:10.1007_s40888-017-0088-9 is not listed on IDEAS

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    Keywords

    Technology; Innovation; Openness; Policy; China;

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