The innovation theme is also a signal to the rest of the world that China is jockeying to join the ranks of the industrialized countries that have historically relied on innovation to drive their growth. The question on the minds of other emerging economy countries is whether they, too, can leverage innovation for development, but without making significant investments in research and development as China is doing.
Contrary to popular opinion, emerging nations do not need to make large investments in research and development to industrialize. Many emerging economies can benefit from the latecomer advantage of being able to harness the large body of technical knowledge that has been accumulated by more advanced economies.
Technological knowledge accumulates in an exponential way, meaning latecomers today inherit much larger pools of know-how than their predecessors. Today, emerging economies have access to even larger pools of technical knowledge than China had when it embarked on its industrial path in the 1980s. This technological abundance makes it possible for more countries to contribute to global economic renewal by developing and expanding new industries. Kenya, for example, developed a robust mobile money transfer industry.
Much of what emerging economies need to do is create joint ventures that use existing technologies. It is through such partnerships that they can start to push themselves to the frontier of technological innovation without significant research and development investment. It is this catch-up approach that propelled Japan’s post-War II economy and helped countries such as South Korea, Taiwan and Singapore to become players in international trade in the 1960s and 1970s. Indeed, China itself has been a significant beneficiary of this latecomer advantage. All of these countries relied on foreign direct investment and joint ventures as mechanisms for technology acquisition.
But simply leveraging existing technology is not enough. Emerging economies need to distinguish between product and platform technologies. Product technologies, such as pharmaceuticals, perform discrete functions. Platform technologies, such as telecommunications, on the other hand, serve as a motherboard for other industrial activities. It is only when emerging economies appreciate the platform nature of new technologies that they can benefit from their latecomer advantage. When mobile phones first entered Africa, they were treated as consumer products. But as their role as a platform technology became evident, mobile phones became the foundation for new industries in fields as diverse as banking, education, agriculture, health and security.
To develop more innovative economies, emerging economy countries need to focus on industrial development in the form of manufacturing, infrastructure, engineering capacity and consistent industrial policies. For most emerging economies, the critical barrier to industrial development is poor infrastructure, which makes it difficult for them to move materials as well as manufactured goods. It is no accident that China’s industrial transformation over the last four decades has also been associated with massive investment in infrastructure, primarily transportation, energy and telecommunications.
Investment in engineering education and skills has been a key feature of all the recently industrialized countries. It is not possible to sustain an industrial economy without strategic investments in the relevant engineering fields. Engineering education alone is not sufficient. Engineering skills are even more critical and such skills usually accumulate in public and private enterprises. Close collaboration between industry and universities can help not only expand the knowledge base, but also align training with labor market needs.
Finally, much of this cannot be achieved without long-term policies that support industrial development. This is possibly the hardest shift that emerging economies have to make. Industrial transformation involves significant reforms in existing institutions and realignment of resources. This kind of broad-scale change is often met with resistance from existing and entrenched leaders in politics and industry, particularly in those countries where a strongman cannot simply implement top-down reforms, as has been the case in China.
China’s bid to become an innovation nation appears to be an effort to break from the ranks of other emerging nations. But its history shows the rest of the world a new path to prosperity and this path also helps to expand opportunities for other nations to contribute to global economic renewal. The global economy will do better with more innovation nations, not fewer.
Read more from The Washington Post’s Innovations section.