Top-down plan­ning chases in­no­va­tion

China Daily (Canada) - - FRONT PAGE -

In this year’s Govern­men­tWork Re­port, Pre­mier Li Ke­qiang has re­peat­edly stressed the im­por­tance of in­no­va­tion. So, is there a proven ap­proach to de­vel­op­ing in­no­va­tive ca­pac­ity in an open econ­omy? El­e­ments of in­no­va­tion strat­egy are mea­sured and com­pared yearly by the Global In­no­va­tion In­dex, the self-de­clared “lead­ing ref­er­ence” for in­no­va­tion in­dices. A col­lab­o­ra­tive ef­fort by Cor­nell Uni­ver­sity, INSEAD and the UN’sWorld In­tel­lec­tual Prop­erty Or­ga­ni­za­tion, the GII takes a broad view of in­no­va­tion, mea­sur­ing seven an­a­lyt­i­cal pil­lars cov­er­ing ca­pa­bil­i­ties (in­puts) and re­sults (out­puts).

The 2014 edi­tion of the GII, the sev­enth in the se­ries, val­i­dates Pre­mier Li’s strat­egy by as­sess­ing, among oth­ers, in­no­va­tion ca­pac­ity through in­sti­tu­tional con­di­tions, in­fra­struc­ture and mar­ket so­phis­ti­ca­tion. At 29, China is the high­est ranked up­per-mid­dle-in­come coun­try. In­deed, this is a re­mark­able achieve­ment con­sid­er­ing the his­tor­i­cal head­start en­joyed by manyWestern coun­tries. The ac­com­pa­ny­ing GII re­port em­pha­sizes that China has out­per­formed other BRICS coun­tries in the rank­ings, and pre­dicts a con­tin­ued rise. The re­port cites China’s uni­ver­sity and re­search sys­tem devel­op­ment as fac­tors for its rise.

A closer ex­am­i­na­tion re­veals that China’s 45th rank in in­no­va­tion “in­put” pil­lars (in­clud­ing in­fra­struc­ture and re­search) is only the fourth-best among up­per-mid­dle-in­come coun­tries— be­hind Malaysia, Hun­gary andMau­ri­tius. Con­versely, China ranks 16th in in­no­va­tion “out­put” pil­lars, which mea­sure pro­duc­tion of knowl­edge, tech­nol­ogy and cre­ativ­ity. The lat­ter is an im­prove­ment of nine places from the pre­vi­ous year and the high­est among up­per-mid­dle-in­come coun­tries. This dif­fer­ence im­plies that China is “do­ing more with less” com­pared with other coun­tries.

While only re­cently re­flected in this rank­ings surge, China’s suc­cess is ac­tu­ally the re­sult of decades of in­vest­ment in re­search and devel­op­ment, which, ac­cord­ing to the GII re­port, China has made at triple the rate of coun­tries with sim­i­lar in­come lev­els since the 1990s.

Nev­er­the­less, China still has room for im­prove­ment on key sub-in­dices. Among the 143 coun­tries sur­veyed in the GII, China un­der-per­forms in sev­eral di­men­sions, in­clud­ing ease of start­ing a busi­ness (122), ter­tiary ed­u­ca­tion (115) and knowl­edge-in­ten­sive em­ploy­ment (101). It also ranks 114 in the over­all in­sti­tu­tions sub-in­dex, which con­sti­tutes mea­sure­ments of po­lit­i­cal, reg­u­la­tory and busi­ness en­vi­ron­ments. And its rank­ings in other key in­no­va­tion-re­lated fac­tors are mod­er­ate, in­clud­ing num­ber of re­searchers (50), in­tan­gi­ble as­sets (50) and cre­ative goods and ser­vices (33).

Are Li’s mech­a­nisms and ecosys­tems enough to main­tain progress and rem­edy the de­fi­cien­cies? In­no­va­tion zones are in­creas­ingly tar­geted by re­formed fi­nanc­ing and tax in­cen­tives. To­gether with val­ues such as open­ness and mod­ern­iza­tion, in­no­va­tion is also be­ing pro­posed as a tool to re­vi­tal­ize stag­nant in­dus­tries and re­gions. But the lure of visibility com­pels lead­ers to fo­cus on im­me­di­ate re­turns. Mod­ern of­fice parks, head­line-grab­bing tax re­forms and col­lab­o­ra­tions with high-pro­file part­ners cul­ti­vate the im­pres­sion that China’s com­mit­ment to in­no­va­tion is gen­uine and am­bi­tious. How­ever, the process of mak­ing Li’s ecosys­tems a re­al­ity is slower and less glam­orous work.

At the dawn of the com­puter age, the ti­tle of Sil­i­con Val­ley was up for grabs. In the United States, both Bos­ton and the San Fran­cisco area had the right ad­van­tages, in­clud­ing a highly ed­u­cated pop­u­la­tion and the pres­ence of world-class uni­ver­si­ties. But it was the San Fran­cisco area that snagged the cov­eted sta­tus away from Bos­ton. The rea­sons may be in­struc­tive for China in its pur­suit of an in­no­va­tive ecosys­tem.

Ac­cord­ing to tech­nol­ogy scholar An­naLee Sax­e­nian, in­sti­tu­tional dif­fer­ences were the pri­mary fac­tor. Bos­ton was im­pris­oned by a le­gacy cor­po­rate cul­ture whose unyield­ing hi­er­ar­chy sti­fled the free­wheel­ing ex­per­i­men­ta­tion nec­es­sary for in­no­va­tive break­throughs. In con­trast, the so­cial­pro­fes­sional net­works and cul­ture of open col­lab­o­ra­tion in the San Fran­cisco area gen­er­ated a wel­com­ing at­mos­phere for in­no­va­tion.

Au­thor Richard Florida later ar­gued that the three crit­i­cal fac­tors gen­er­at­ing growth of high­tech­nol­ogy re­gions are tal­ent, tech­nol­ogy, and tol­er­ance. The first is ar­guably a func­tion of ed­u­ca­tional in­vest­ment, the sec­ond of in­fra­struc­ture and the third of cul­ture. Ef­fec­tive in all three fac­tors, Cal­i­for­nia’s Sil­i­con Val­ley quickly es­tab­lished a pre-em­i­nent po­si­tion in the world’s most dy­namic and prof­itable in­dus­try.

The sub­stance be­hind Li’s “mech­a­nisms and ecosys­tems”— more than their visibility and fan­fare— will de­ter­mine China’s in­no­va­tive per­for­mance. One crit­i­cal les­son, how­ever, is ev­i­dent from his­tor­i­cal ex­pe­ri­ence. De­vel­op­ing that fa­mously elu­sive en­vi­ron­ment nec­es­sary for in­no­va­tion in­volves more than bricks, mor­tar and tax in­cen­tives. But with­out an en­vi­ron­ment of col­lab­o­ra­tion and open­ness, in­no­va­tion progress may ul­ti­mately revert to the pace of the tor­toise. Asit K. Biswas is dis­tin­guished vis­it­ing pro­fes­sor, and KrisHart­ley is a doc­toral can­di­date at the Lee Kuan Yew School of Public Pol­icy, Na­tional Uni­ver­sity of Sin­ga­pore.

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