“Innovative China: New Drivers of Growth” Report Co-Written by Associate Professor Dan Prud’homme

The report provides a reform agenda targeted at Chinese policymakers that emphasizes productivity and innovation as central to driving prosperity in China’s future development path. Prof. Prud’homme was commissioned by the World Bank to provide research and recommendations about China’s intellectual property regime for the report. The research, which Professor Prud’homme undertook with Professor Zhang Taolue (Tongji University, Shanghai), also resulted in a separate book recently published by Springer entitled “China’s intellectual property regime for innovation: Risks to business and national development”.

Abstract

After more than three decades of average annual growth close to 10 percent, China’s economy is transitioning to a ‘new normal’ of slower but more balanced and sustainable growth. Its old drivers of growth — a growing labor force, the migration from rural areas to cities, high levels of investments, and expanding exports — are waning or having less impact. China’s policymakers are well aware that the country needs new drivers of growth. This report proposes a reform agenda that emphasizes productivity and innovation to help policymakers promote China’s future growth and achieve their vision of a modern and innovative China.  The reform agenda is based on the three D’s: removing Distortions to strengthen market competition and enhance the efficient allocation of resources in the economy; accelerating Diffusion of advanced technologies and management practices in China’s economy, taking advantage of the large remaining potential for catch-up growth; and fostering Discovery and nurturing China’s competitive and innovative capacity as China approaches OECD incomes in the decades ahead and extends the global innovation and technology frontier.

Overview

“The report makes clear that investing in people, removing remaining distortions in the economy and reducing market barriers to competition will be critical as China works to boost its innovation capabilities”, said Victoria Kwakwa, World Bank Vice President for East Asia and the Pacific.

The report argues that unlocking the new drivers of growth will require continuous reforms. To help boost innovation and productivity, the role of the state needs to evolve and focus on providing stable market expectations, a clear and fair business environment, strengthening the regulatory system and the rule of law, and reforming the management of civil service performance to further support the market system.

Dan Prud’homme is an an associate professor at EMLV Business School (Paris, France) and non-resident research associate at Duke University’s Kunshan, China campus. Prior to joining academia, he worked in the private sector in Beijing and Shanghai, China. Dan holds a PhD from Macquarie Graduate School of Management (Sydney, Australia) and graduate degrees in law and public policy.