China's Development Model: An Alternative Strategy for Technological Catch up
China’s Development Model: An Alternative Strategy for Technological Catch-Up
Working paper
Xielin LIU Visiting Professor Institute of Innovation Research Hitotsubashi University liuxielin@hotmail.com March 22， 2005
Abstract The context in which Chinese firms and, as a nation, China is attempting to catch-up is fundamentally different that that facing earlier latercomers such as Japan and Korea. This paper contrasts these contexts and describes an alternative model of catch-up that can be discerned through an examination of the industries in which Chinese firms are competing successfully. The basic elements of their two-stage catch-up strategy is that they first take advantage of the modularization of manufacturing in an industry, source technology externally, and are intensely market-oriented in their product innovation; only later do they pursue internal capabilities in technological development to generate process and product innovations.
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1. INTRODUCTION In the decades that the topic has received attention, two approaches and explanations have emerged to explain the process by which developing countries (those far behind the technological and manufacturing frontier) may be able to “catch up”; namely, accelerate their development and reduce the gap between themselves and the technologically and economically advanced countries. One extends the early neoclassical growth models (e.g., Solow, 1956) in which technology freely spills across country borders and this drives convergence. Another, in contrast, is based in historical, institutional and evolutionary Technology and
traditions and rejects such a simplifying assumption about technology.
innovations are not seen as flowing freely across country (or organizational) boundaries. Instead, technology and especially the innovative process from which it arises and is applied is closely related to specific firms, networks and economic institutions (Freeman, 1987, Nelson, 1993). In this
Working paper
Xielin LIU Visiting Professor Institute of Innovation Research Hitotsubashi University liuxielin@hotmail.com March 22， 2005
Abstract The context in which Chinese firms and, as a nation, China is attempting to catch-up is fundamentally different that that facing earlier latercomers such as Japan and Korea. This paper contrasts these contexts and describes an alternative model of catch-up that can be discerned through an examination of the industries in which Chinese firms are competing successfully. The basic elements of their two-stage catch-up strategy is that they first take advantage of the modularization of manufacturing in an industry, source technology externally, and are intensely market-oriented in their product innovation; only later do they pursue internal capabilities in technological development to generate process and product innovations.
1
1. INTRODUCTION In the decades that the topic has received attention, two approaches and explanations have emerged to explain the process by which developing countries (those far behind the technological and manufacturing frontier) may be able to “catch up”; namely, accelerate their development and reduce the gap between themselves and the technologically and economically advanced countries. One extends the early neoclassical growth models (e.g., Solow, 1956) in which technology freely spills across country borders and this drives convergence. Another, in contrast, is based in historical, institutional and evolutionary Technology and
traditions and rejects such a simplifying assumption about technology.
innovations are not seen as flowing freely across country (or organizational) boundaries. Instead, technology and especially the innovative process from which it arises and is applied is closely related to specific firms, networks and economic institutions (Freeman, 1987, Nelson, 1993). In this
References: 24 Liu, Xuchuan, 2004 58.6 95.2 141.7 197.1 249.9 353.6 442.3 560.2 Source: China Science and Technology Statistics Yearbook, 1991-2003, Beijing. Source: China Science and Technology Statistics Yearbook, 1991-2003, Beijing. 2002 132399 21473 5868 27.3 15605 72.7 57484 57092 99.3 392 0.7 53442 49143 92.0 4299 8.0 Source: China Science and Technology Statistics yearbook, 2003, Beijing.