EIJS Working Paper Series,
Stockholm School of Economics, The European Institute of Japanese Studies

Abstract: Three major economic regions exist in China Pearl River Delta (PRD), Yangtze River Delta (YRD) and Bo Hai Rim (BHR) and have number of important and striking similarities. The success of regional innovation systems in China has its roots in the following three factors. First, the central government has strongly supported the regions by providing a framework and resources for the various types of zones, industrial parks, science parks and incubators where national science and technology programs have often been involved. Second, foreign direct investment and the increasingly closer industrial and technological links with the neighboring countries have given strong impetus to regional development through technology transfer, management skills and extensive links to global markets. Third, the directed but often spontaneous development of technological and industrial clusters has provided the basis for further development.

In any country, and particularly in a country like China with its extraordinary size and diversity, technological innovation will take place in a number of its regions that are likely to become spatial innovation systems. Huge amounts of innovations - of a gradual and incremental nature - are already taking place in manufacturing firms all over China, although primarily in the dynamically evolving coastal areas. These firms have often agglomerated into geographical clusters and are found in many industrial sectors. A number of such clusters are evolving into centers of strong innovative capability. They are still weakly linked and inadequately supported by actors within the state-level innovation systems. However, a natural formation of three major regions in China have prompted provinces and cities within them to act as midwifes to bring out an environment that can deliver not only incremental innovations but also breakthrough innovations in future-oriented industries. A number of regional development programs and projects play an important role in this process and has the potential of enhancing needed and strong links between local clusters, foreign technology sources and national programs.

Keywords: Regional development; innovation system; clusters; development block; competence block; technology system; FDI

JEL-codes: O14; O18; O31; O32; R12; R12; R58

263 pages, July 1, 2004

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