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Developing the Innovation-Driven Economy That Better Reflects the Function of Original Innovation - 2021-01-21

 

 

Innovation-driven development is one of Shanghai’s distinctive features and significant advantages in its economic growth. Theoretically, metropolises are natural incubators for innovation. With a large population, high population density, excellent facilities, convenient communication with and transportation to cities at home and abroad, and booming development of trade in goods and services, they are more likely to witness various innovations. According to the principles of urban economics, metropolises tend to have agglomeration effects conducive to innovation by virtue of the cost sharing, learning and market-matching mechanisms. As a megacity, a global city and China’s largest economic center, Shanghai has comparative advantages and a realistic foundation for innovation, entrepreneurship and creation. The innovation-driven economy is about continuously stimulating innovation vitality, the key of which is talented people. Shanghai has topped the list of Amazing China: The Most Attractive Chinese Cities for Foreign Talented People for seven consecutive years, which shows its ability to attract talented people. As more talented people gather in Shanghai, the characteristics of innovation-driven economy have gradually emerged in recent years. Here is a set of data. In 2019, Shanghai’s social R&D investment accounted for 4% of its GDP, higher than the national average of 2.23%. The number of patents of invention per 10,000 people reached 53.5, twice the number five years ago. By the end of 2019, there were 14 major national scientific and technological infrastructures established or under construction, and 461 foreign R&D centers in Shanghai, ranking first nationwide. Shanghai’s integrated circuit industry took a leading position in the country in terms of scale and technologies. Shanghai’s total investment exceeded RMB300 billion. With more than 600 enterprises, its industrial scale accounted for about 20% of the national total. It had about 200,000 employees and about 40% of talented people of various industries nationwide. As a new generation of internet enterprises spring up, Shanghai has made remarkable achievements in the development of online new economy. Despite of the obvious advantages, Shanghai’s weak links cannot be ignored. For example, the transformation rate of scientific and technological achievements is not high, with many scientific research results failing to be applied and staying idle in laboratories. In terms of R&D investment, Shanghai’s investment in the basic research that supports original innovation is relatively small compared to other science and technology innovation centers, and the proportion of corporate R&D investment remains to be increased. Emerging industries account for a relatively low proportion of Shanghai’s GDP, with only a few gazelle companies, unicorn companies and industry-leading companies. To solve these problems actively and effectively, and release development potential of the innovation-driven economy, it is necessary to focus on improving the design and implementation of competition policies, optimizing the business environment and protecting intellectual property rights. As the saying goes, it’s impossible to find a new world with an old map. Given the new development pattern, it’s necessary to arouse the enthusiasm of diversified innovation entities including enterprises, institutions and talented people to create an innovation-driven economy. The key lies in cultivating and building a rainforest-like innovation ecosystem to continuously stimulate innovation vitality. The innovation-driven economy is dynamic rather than static. It keeps developing and never stops. This means that Shanghai undertaking a special mission needs to have the patience for a long journey and determination to adhere to its strategies, as well as a sense of urgency to seize every minute. Currently, it can focus on three aspects and make greater efforts. First, it needs to improve the design and implementation of competition policies. In particular, in face of the rise of platform-based enterprises relying on information, digitization and smart technologies, accelerating industrial integration, and emergence of new industries, business forms and models, Shanghai should try its best to replace traditional industrial policies, pay attention to competition neutrality in emerging industries, and strengthen the fundamental role of competition policies. Second, it needs to keep optimizing the business environment and improve the systems that protect and stimulate the vitality of market players. Third, it needs to strengthen the protection of intellectual property rights. Since innovation is the primary driving force for development, protecting intellectual property rights is protecting innovation. It’s necessary to step up efforts to build Shanghai into an IPR protection center in the Asia-Pacific region, and enhance the ability of innovation entities to use international IPR rules. Focusing on the bigger picture of national development, the central government requires Shanghai to strengthen the “four functions,” to which the “five types of economy” are pillars. Shanghai needs to make strategic plans and earnestly implement them. In terms of innovation-driven economy, it is imperative to accelerate the building of three world-class industrial clusters of integrated circuits, biomedicine and artificial intelligence, and to develop the innovation-driven economy that better reflects the function of original innovation on the basis of consolidating and magnifying existing advantages. (Li Lu, Associate Professor of the Department of Economics of Shanghai Party Institute of CPC)

 


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