CHINA'S TRANSITION TO A KNOWLEDGE ECONOMY INSTITUTIONAL MECHANISMS, PUBLIC POLICIES AND PRIVATE INVESTMENT

This study identifies and describes the underlying mechanisms, structural causes, public policies and institutional arrangements that drive China's transition towards a more innovative economy. It highlights the key characteristics of the national innovation system, in respect to funding for research, government's role and public policies, inbound and outbound foreign investment as well other factors. The study does not attempt to evaluate how innovative China is, but explains how innovation actually occurs in China. China's technological progress relies on unique mix of liberalization, imitation, incremental innovation, strong R&D spending, burgeoning market scale, competition between local governments and strong central policies. Progress is uneven, as several technological sectors and administrative regions are global leaders, whereas others fall far behind. Elements of this landscape might be of use to other developing economies. However, due to the peculiarity of China's, including its economic and demographic scale, as well as its political system, its solutions might only fit China.