Headlines on China’s innovation have been popping up this week, as the world wonders what the next big economic development will be for the country, which recently surpassed Japan for the #2 rank in GDP. Both The Economist and Reuters have run stories taking insight from a new book, The Run of the Red Queen: Government, Innovation, Globalization, and Economic Growth in China, by Dan Breznitz and Michael Murphree, in which they examine the strengths and weaknesses of the Chinese economic system to discover where the nation may be headed and what the Chinese experience reveals about emerging market economies.
Breznitz and Murphree find that in our new world of globally fragmented production China does not need to master breakthrough innovations to achieve success, as popular opinion would have it. Instead, China's development is based on keeping pace with the technological advances of other nations, and mastering subsequent stages of innovation. Significantly, this development path has been drastically different from the plans and ambitions of the Chinese central government, and hence, this growth trajectory was not at all centrally planned. The book systematically tracks and explains this development path and in doing so offers a unique understanding of the Chinese political economy and its structured uncertainty.