From Technological Catch-up to Innovation Summary Income gaps among countries are largely explained by differences in productivity. By raising the capital/labor ratio and rapidly assimilating technologies across a wide range of activities, China has increased factor productivity manifold since 1980 and joined the ranks of middle income countries. With the launch of the 12th FYP, China has set its sights on becoming a high income country by 2030 through a strategy combining high levels of investment with rapid advances in technology comparable to that of Japan from the 1960s through the 1970s and from the 1980s through the end of the Korea’s century. During the next decade, more of the gains in productivity are likely to derive from technology absorption and adaptation supplemented by incremental innovation. By 2030, China expects to have pulled abreast technologically of the most advanced countries and increasingly, its growth will be paced by indigenous innovation which pushes outwards the technology frontier in areas of acquired comparative advantage. Both the first stage and the next will rest on the success of a number of policies focused on: competition and the evolution of the business sector; skill development; R&D; national and international networking to promote innovation; and the nurturing of innovation in major urban centers. A competitive market environment is the precondition for a steady improvement in productivity. Starting in the late 1980s, for example, market oriented reforms stimulated entry and competition in most manufacturing sub-sectors. Even in some or example, airlines and telecommunications) the “strategic” “pillar” industries (for
From Technological Catch-up to Innovation Summary Income gaps among countries are largely explained by differences in productivity. By raising the capital/labor ratio and rapidly assimilating technologies across a wide range of activities, China has increased factor productivity manifold since 1980 and joined the ranks of middle income countries. With the launch of the 12th FYP, China has set its sights on becoming a high income country by 2030 through a strategy combining high levels of investment with rapid advances in technology comparable to that of Japan from the 1960s through the 1970s and Korea’s from the 1980s through the end of the century. During the next decade, more of the gains in productivity are likely to derive from technology absorption and adaptation supplemented by incremental innovation. By 2030, China expects to have pulled abreast technologically of the most advanced countries and increasingly, its growth will be paced by indigenous innovation which pushes outwards the technology frontier in areas of acquired comparative advantage. Both the first stage and the next will rest on the success of a number of policies focused on: competition and the evolution of the business sector; skill development; R&D; national and international networking to promote innovation; and the nurturing of innovation in major urban centers. A competitive market environment is the precondition for a steady improvement in productivity. Starting in the late 1980s, for example, market oriented reforms stimulated entry and competition in most manufacturing sub-sectors. Even in some “strategic” or “pillar” industries (for example, airlines and telecommunications) the
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