Finding Innovation in Dark Corners

“Global Technology Sourcing in China’s Integrated Circuit Design Industry: A Conceptual Framework and Preliminary Findings”
Dieter Ernst and Barry Naughton
East-West Center
August 2012

For nearly a decade, Chinese policy-makers have been on a seemingly Quixotic quest to turn the nation’s low-cost manufacturers into innovation-driven firms. The question that has plagued that effort from the start is whether Beijing’s “indigenous innovation” drive isn’t just a form of techno-protectionism, and if not, whether and how policy might actually aid in the emergence of world-class innovative firms.

That question remains largely unanswered, but Dieter Ernst and Berry Naughton have gone looking for answers in China’s integrated circuit design business. What the paper reveals is an example of how innovation is taking place outside the purview of government industrial policy, calling into question the value of centrally-driven strategic emerging industries.

A growing body of evidence suggests that the ship of state capitalism will founder on the rocks of innovation. The emergence of the new and the novel from overlooked quarters offers a reminder of the agrarian entrepreneurialim that emerged in 1980s China when Deng Xiaoping simply lifted the heavy hand of central planning. Ernst and Naughton’s study seems to points the nation toward a more productive approach to industrial innovation, yet one that would sorely test the natural interventionist urge of Party aparatchiks.

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Understanding the Pattern of Growth and Equity in the People’s Republic of China

Understanding the Pattern of Growth and Equity in the People’s Republic of China. Liu Minquan of the ADBI explains why some of the factors that drove growth in China during the first 30 years of reform and opening cannot help the country in the long run.

China’s Uneven Rise

China’s Petroleum Predicament: Challenges and Opportunities in Beijing’s Search for Energy Security | Andrew S. Erickson.

Tip of the hat to Andrew Erickson for catching this excellent essay in Jane Golley and Ligang Song’s new Rising China: Global Challenges and Opportunities (PDF). Kennedy’s chapter focuses on the China’s growing dependence on imported energy, and stands out in this excellent compendium.

As for the book, Golley and Song have made it downloadable, and it is well worth it. Arguably, the most vexing challenges China faces are domestic, but Rising China focuses on the international points of friction that are likely to be exacerbated by domestic politics.

The list of international challenges generated by this work is by no means comprehensive: such an inventory would require a bookshelf, and a full review of China’s security challenges would occupy a wall. Nonetheless, the authors – both Chinese and foreign – have created a catalog of the most critical issues, and one that lacks the demagoguery and angst of less scholarly studies.

Rethinking Operations for a Two-speed World

In a new special report, Wharton and the Boston Consulting Group explore how companies need to figure out how to operate in a world where their core markets are developing at radically different paces.

This is an interesting thesis, and will be of varied value depending on the industry, but for any company in the internet and technology businesses trying to bridge the BRIC countries on the one hand and the developed economies on the West on the other, this is an essential read.

My only quibble with the thesis would be the question “is this a two speed world or ten speed world.” Certainly China and the UK are now growing at two different speeds. On the other hand it could also be argued that the pace of market development varies widely among the BRIC countries, to say nothing of the differences among the BRICs, the West, and Africa.

In short, Wharton is taking the first steps in an important direction with this report, helping companies rethink and restructure to address this emerging challenge of globalization. Expect to see more debate along these lines in the future.

Preparing for the Future of HIV/AIDS in Africa: A Shared Responsibility

An interesting read that calls on the United States and the African Nations to work together to address the problem of AIDS in Sub-Saharan Africa.

While the book is ostensibly US-Africa in the way it focuses on solutions, the authors make frequent reference to a need for the US to build a consortium of major emerging nations, in particular given growing challenges to US government budgets. The subtext is clear: while the US has a major role to play in addressing global diseases, it can no longer do so unilaterally.

Food Security Assessment 2010-20

Food security, the question of where and to whom food is available in the world, is becoming one of the touchstone issues in the entire debate about sustainability and population. This USDA report looks at the issue over the next 10 years, and sees regional improvements – and disturbing regional declines.

Anyone interested in Africa – or China’s policy there – would do well to peruse this pdf book, particularly as China starts looking to Africa to potentially provide foodstuffs for Asia.