Foreign R & D in China: An evolving innovation landscape

While there is a general view in the literature that despite China’s very significant pace of economic growth in GDP terms since adopting its Open Door Policy in 1978, the level of innovation is still rather low. For the years 1995 to 2005, China was the fastest improving country in terms of innovation, but was still ranked only 34th globally in 2005. More recent data indicates that while China continues to be considerably behind the EU27 in many indicators, it is the only BRICS country to show that it is closing the innovation gap with Europe. Bearing in mind criticisms of various innovation indicators, data from The Global Innovation Index for various years provides some indication of China’s evolving progression in relation to various indicators of innovation compared with the emerging economies of India and Brazil. While India and China are of similar size in terms of population, with Brazil having less than 200 million people, GDP per capita at $12,038 is higher than that of China and significantly more than that of India (Appendix, Table 8A.1). The overall ranking of all three countries has slipped somewhat since 2009, but China remains considerably ahead of both India and Brazil. China’s best performing indicator is scientific outputs, ranking number 2 globally in 2013, while its worst performance relates to institutions and creative outputs. On the other hand, China outperforms both India and Brazil in relation to market sophistication and human capital and research.