hina Literature Limited CEO Liang Xiaodong and Wu wenhui rase champagne glasses

Economics

中国创新会超过西方吗？

Mar 5, 2018 Edmund S. Phelps

纽约—十九世纪初至二十世纪初，西方国家将经济增长归因为“科学家和航海家”的发现。一个国家只需要“热衷于”开发“显而易见”的商业应用，并为满足新产品的需求创建便利条件，就可以实现经济增长。

直到最近，中国都相信这个说法。但如今，中国商人和企业家日益表现出他们不仅具备适应新机会的企业家动力，还表现出为自己创新而非简单复制已有创新的渴望和能力。

事实上，越来越多的中国公司正在意识到，它们必须创新才能赶超——并保持——全球经济的领先地位。一些公司——主要包括阿里巴巴、百度和腾讯——通过提供便利创新活动的数字时代基础设施而取得突破。工业企业最近也转向了机器人和人工智能。

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0 Comments on this paragraph, 12 Comments on this article

Mark Dallas Mar 15, 2018

What alternative universe is Phelps living in? (and some of the commentators too!)

He writes, "The West seems to have forgotten this. Since the 1930s, most Western governments have seen it as their duty to protect established enterprises from competition, even when it comes from new firms offering new adaptations or innovations."

SERIOUSLY? The Reagan-Thatcher Revolution?...The Washington Consensus?....The Digital Revolution since the 1990s and rise of Google, FB and other global giants who are "disrupting" just about every industry?

In his universe, there has been a secular, linear trend of "big government choking innovation"? I don't see a linear trend at all...I mean, if you are actually reading history rather than speaking ideologically....
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Alex Aslanidis Mar 12, 2018

"innovation remains weak in the West, where growth in total factor productivity (TFP) has continued its long slowdown."

TFP is weak because investment is weak, and investment is weak because demand is weak.

The problem: deficit countries (where most of the demand originates from) cannot address the demand shortage without protectionism, otherwise their fiscal boosts will result in import leakage.
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Richard Stewart Mar 11, 2018

Once again Phelps says in a few words what others can't say in many.

Governments don't innovate, people do. The Chinese, however, have a post WWII history of becoming a less bad government, while the US has a post Calvin Coolidge history of government slowly tightening the noose around the necks of its citizens, apparently with the hope of choking off all free thought and innovation.

The Chinese will win.
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Michael Putnam Mar 11, 2018

Interesting argument regarding the US losing out on innovation through increasing consolidation and monopolies. However, painting China as a start up dream seems a little exaggerated. China has struggled to cut off capital to giant legacy SOE's which are inefficient and block potential entrepreneurs/new companies from succeeding. In addition, I think it would be worth addressing the Chinese governments role and whether its tendency to push its thumb down on the scale helps or hurts long term innovation and new companies. Thanks for the article.
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Peter Schaeffer Mar 10, 2018

"The West must address its great TFP slowdown, which has lasted since the late 1960s."

Phelps clearly attributes the slowdown to policy. However, there is evidence that the great post-WWII technology boom simply came to an end. To use an important example, the 3D printing boom of the 50s and 60s was injection molding (of plastics). The current 3D printing boom(let) uses 3D printers. Which one had more impact? If you have any doubts about the answer, you haven't studied 3D printing much.
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Rokon Zaman Mar 7, 2018

Innovation in the West primarily originates from the invention of new technologies from the scientific principles discovered by the basic research--mostly funded for the defense purpose. On the other hand, Japan succeeded in the innovation space by fusing component technologies invented by the West and pursuing incremental progression. Both of those capabilities needed decades to institutionalize to turn investment into a profitable return. On the other hand, China's success has been subsidy and infrastructure driven replication, imitation in certain cases, of existing products--to become world factory of commodity products. Despite aspiration and significant progress in the patent filing (reaching to more than 1 million), China needs decades to institutionalize the capacity to invent and innovate--to be a threat to the West, and Japan. Nevertheless, China's entry and progression in the innovation space worth of watching.
- P. Kamath Mar 7, 2018
  
  Rightly said. Don't underestimate or rediculed anybody!
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j. von Hettlingen Mar 7, 2018

Edmund S. Phelps, the 2006 Nobel laureate in Economics, urges the West to adopt a laissez-faire policy, insisting governments must refrain from protecting “incumbent firms at the expense of new market entrants.” In the absence of a “free and fair competition” entrepreneuers see little incentive to innovate. Many economists believe the slump in productivity growth often reflects the stagnation of innovation. History shows that economy in the West grew thanks to the technological discoveries of “scientists and navigators.”
In order to boost growth in total factor productivity (TFP), which measures the combined productivity of capital and labour, the West must invest in human resources, as well as equipment and structures. Christine Lagarde called for more spending on education, R&D, innovation and less red tape a year ago, as a means to ramp up productivity, which is the most important source of higher income and rising living standards.
The author says China has realised the problem and is seeking to “out innovate” the West. Instead of copying what is available, Chinese are “showing not only the entrepreneurial drive to adapt to new opportunities, but also the desire and capacity to innovate for themselves.” Taking advantage of a weak innovative activity in the West, the Chinese government supports domestic businesses to develop “a capacity to produce indigenous innovations,” encouraging people to start new a business and compete.
Competition is healthy to a country’s economy, because a “society benefits – through lower prices, more jobs, better products and services.” It is also motivates people to innovate, forcing them to update their knowledge and know-how. If a government intervenes by protecting “established enterprises from competition, even when it comes from new firms offering new adaptations or innovations,” it will only discourage people from bringing new and better ideas.
The author points out the sluggish TFP growth rate in Britain until Margaret Thatcher came to power. She ditched “anti-competitive practices,” and the country’s TFP grew again by the mid-1980s. China faced a similar problem and its TFP growth increased since Xi Jinping took office. With the country’s vast economic and human resources, he seeks to achieve technological dominance over the US.
Stephen L. Sass, a former scientist and Cornell professor who had worked in China doubted if the country would lead in innovation anytime soon - or at least not until it moves its institutional culture away from suppression of dissent and toward freedom of expression and encouragement of critical thought. He is convinced that political freedom is crucial for scientific innovation.
Sass said most innovations and cutting edge technology come from countries with relatively high levels of political and intellectual liberty. Free societies encourage people to be skeptical and ask critical questions. Most of all they attract foreign talent. Innovation is typically the product of a bottom-up approach, started with the bright ideas of a few individuals, sometimes in a garage.
While the author calls for an end to government intervention in the West that hurts innovation and impedes competition, critics and observers are not – yet – worried that China will “out innovate” them anytime soon.
- P. Kamath Mar 7, 2018
  
  But one can innovate and their products can be manufactured in China! Is it not. Good idea- win-win sol'n.!
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P. Kamath Mar 6, 2018

Innovations can not be created by state directives, but by encouragement. Innovations come from in all walks of life and freedom to think, try, exchange of ideas, disseminate knowledge by read, experiment and travel are all factors .
Availability of private and public funds are also determining factors here too!
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