Innovating in “lagging” cities: A comparative exploration of the dynamics of innovation in Chinese cities

Abstract

Innovation, proxied by patent applications, in China is highly territorialised. The lion's share of the country's innovation is concentrated in its richest city-regions. Less developed cities —defined as cities whose GDP per capita is below 75% of the national average— also innovate but innovate far less. And how they manage to do so is not sufficiently understood. This paper explores the processes of innovation in China's more and less developed cities. We develop an econometric analysis involving 283 Chinese cities between 2003 and 2014 to address: (a) what are the socioeconomic and structural factors that govern processes of innovation in Chinese cities? And (b) how do these factors differ between more and less developed cities? The analysis indicates that China's more and less developed cities innovate in markedly different ways. The innovation systems of China's more developed cities are more complex, integrated and mature —leveraging knowledge from R&D activities, large human capital endowments and inter-city spillovers— than those that have emerged in the country's less developed cities. Innovation in less developed cities also suffers from the lower capacity of these cities to generate knowledge synergies.