OECD Reviews of Innovation Policy: China 2008

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OECD Reviews of Innovation Policy offer a comprehensive assessment of the innovation system of individual OECD member and non-member countries, focusing on the role of policy and government. The Chinese government has launched a national strategy to build an innovation-driven economy and society by 2020. Will China be able to succeed in making this challenging transition? This report assesses the current status of China’s national innovation system and policies, and recommends improvements required in both the policy and institutional environments for China to succeed in promoting innovation through a market-based approach.

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Innovation and R&D in China's Business Sector

In the innovation process, companies play the most important role in introducing innovation to the market (Schumpeter, 1912). In China, however, companies have historically been a weak part of the innovation system. In the planned economy, companies were essentially factories with very low research and development (R&D) input and innovation output. Public research institutions (PRIs) played the dominant role in innovation by conducting mission-orientated projects and R&D requested by business. The system was inefficient in terms of innovation outputs, and there was a huge gap between what the PRIs did and what firms needed (Liu and White, 2001). Industry therefore had to rely on imported technology to answer its needs.


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