| By: |
Wendy Dobson (Institute for International Business, Rotman School of Management);
A.E. Safarian (Rotman School of Management) |
| Abstract: |
How is the Chinese economy making the transition from imitation to innovation
as the source of sustained long term growth? We address this question using
the evolutionary approach to growth in which institutions support technical
advance and enterprises develop capabilities to learn and innovate. Growth is
seen as a series of disequilibria in which obstacles to innovation such as
outdated institutions and weak incentive systems can cause growth to slow. We
review existing literatures on institutions and firm behavior in China and
compare these findings with those of our survey of Chinese firms in 2006.
Industry and firm studies in the literature show how productivity is rising
because of firm entry and exit rather than the adoption of new technologies. A
striking feature both of the studies in the literature and our survey is the
increasing competitive pressures on firms that encourage learning. Our survey
of privately owned small and medium enterprises in five high tech industries
in Zhejiang province found a market-based innovation system and evidence of
much process and some product innovations. These enterprises respond to
growing product competition and demanding customers with intensive internal
learning, investment in R&D and a variety of international and research
linkages. |
| JEL: |
O23 H20 |
| Date: |
2008–03 |
| URL: |
http://d.repec.org/n?u=RePEc:ttp:iibwps:08&r=cna |