ECON 455 Lecture 19 Technological upgrading

ECON 455 Lecture 19 Technological upgrading - Econ455...

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1 1 Econ455: Economic Development in China Lecture 19: March 26 Technological upgrading Sandra Poncet Lorch Hall, room 207 Email: [email protected] Office Hours: Mondays 16:30-18:30 & Wednesdays 10:30-12 2 Introduction Importance of technological upgrade China’s great ambition in technology (China’s space program: plan for China's first moonwalk in 2024 and Mars) is part of a more global objective to become an accomplished superpower Dependence: payment of duties and copyrights. China has the world’s third largest deficit in royalties (measured by the ratio [(Exports-Imports) in service item] /[World trade in service item] (in %) Resolve its current unsustainable position on the unfavorable side of the terms of trade Very topical issue: no consensus: pessimism coexists with optimism
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2 3 Lecture Outline Introduction I-The Buzz and the reality A-Rosy pictures B-Not quite so rosy C-The new great leap forward II-Prospects of China’s technological upgrade A-Strengths B-Paradox 1: R&D subsidies and campaigns may have dampened innovativeness C-Paradox 2: Pressing technology transfers from MNC may have reduced effective knowledge spillover Conclusion: positive evolution 4 I-The Buzz and the reality A-Rosy pictures ° CNet: “After Years of Being Called a Sleeping Giant of Technology, China is Finally Awakening.” (Jul. 9, 2002) ° New York Times: “Let a Thousand Ideas Flower: China Is a New Hotbed of Research” (Sept. 13, 2004) ° Wall Street Journal: “China Grows as a Global Magnet for R&D.” (Mar. 13, 2006) ° Business Week: “A Dragon in R&D” (Dec. 6, 2006) ° Financial Times: "China is Threatening America's Lead in Technology" (Jan. 15, 2007)
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3 5 I-The Buzz and the reality A-Rosy pictures Rapid increase in invention 6 A-Rosy pictures
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4 7 I-The Buzz and the reality A-Rosy pictures Rapid increase in invention registered in the US market 8 B-Not quite so rosy Growth is rapid but level is still very low
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5 9 B-Not quite so rosy Despite the fact that China registered strong growth since 1995, its contribution to the world total is still minor, accounting for around 0.2% and 0.3% of patent grants/applications at the USPTO/EPO, while the United States, Japan and the EU together accounted for around 90% 10 B-Not quite so rosy The level of patenting activity at the State Intellectual Property Office of the People’s Republic of China (SIPO) increased rapidly during the 1990s: but main driver is foreign patent applications (+27% a year between 1990 and 1999 against +12% for domestic patent applications)
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6 11 B-Not quite so rosy In 1999, 65% of the total number of patent applications to the SIPO – which amounted to 45 380 –were made by foreign inventors. Japan (21.6%), EU (18.5%) and the United States (16.2%). 12 B-Not quite so rosy China, with 1.3% of its GDP going to R&D in 2003, is about where we would expect. By another measure—researchers per 1,000 employment China is much further back, reflecting the still large labor force in the traditional agricultural and service.
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7 13 B-Not quite so rosy The pace of patenting in China has grown strongly and steadily.
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