Transcript Innovation and inequality: China’s choice for a harmonious

Innovation and inequality:
China’s choice for a harmonious society
Xielin LIU
Graduate University of Chinese Academy of Science
[email protected]
Shuchen Han
Wuhan University of Technology
Contents
 1. Introduction
 2. The state of inequality in China
 3. Rural innovations for reduction of
inequality
 4. Equality-oriented innovation systems
in rural innovation
 5. Conclusion
1. History of inequality in China
 Equality was the goal of socialism for China.
 But equality+plan economy did not bring China the
welfare and competitiveness.
 Instead, China had been in the road to the
collapse politically as well as economically before
1978.
 The innovation that Mr.Dong made is to tell China
and the world: market economy can be integrated
with socialist ideology. This changed China as well
the world.
Thirty years later
 China is a third country in terms of size of
GDP in 2008.
 The GDP per capita has increased from
100 USD in 1978 to 3000 USD in 2008.
 The economy is industrialized in thirty
years.
19
78
19
80
19
82
19
84
19
86
19
88
19
90
19
92
19
94
19
96
19
98
20
00
20
02
20
04
20
06
20
08
GDP per capita
3500
3000
2500
2000
1500
1000
500
0
Changes in structure (%) of China’s economy, 1970-2008
1970
1980
1985
1990
1995
2000
2005
2008
Share in GDP
Primary Industry
40.2
30.2
28.4
27.1
19.9
15.1
12.2
11.3
Secondary Industry
56.7
48.2
42.9
41.3
47.2
45.9
47.7
58.6
Tertiary Industry
13.1
21.6
28.7
31.6
32.9
39.0
40.1
40.1
Primary Industry
80.8
68.7
62.4
60.1
52.2
50.0
44.8
Secondary Industry
10.2
18.2
20.8
21.4
23.0
22.5
23.8
9.0
13.1
16.8
18.5
24.8
27.5
31.4
Share in employment
Tertiary Industry
Share of rural population
83.0
80..6
76.3
73.6
71..0
64..8
57.0
but
 China’s economic transition and
development have brought unprecedented
sustained growth, but not without social
inequities attending the process.
 The process of industrialization is also
process of marginalization of rural area for a
long time.
Gap of urban and rural households
16000
12000
Per
Capita
Annual
Disposable Income of
Urban Households
8000
4000
2003
2004
2005
2006
2007
1990
1991
1992
1993
0
1994
1995
1996
1997
1998
1999
2000
2001
2002
Per Capita Annual Net
Income
of
Rural
Households
Real GDP per capita between the east, central and west
region
Table 5 Income and expenditure per capita for highest income group and lowest income group in urban（
Item
1995
1998
2001
2003
2005
Income per capita for highest
income group
7537.98
10962.16
15114.85
21837.32
28773.11
Expenditure per capita for
highest income group
6033.10
7593.95
9834.20
14515.68
19153.73
Income per capita for lowest
income group
1923.80
2476.75
2802.83
2590.17
3134.88
Expenditure per capita for lowest
income group
2060.96
2397.60
2690.98
2562.36
3111.47
Questions
 Market competition is the mother of innovation
 But competition can wide the gap as there are
unequal resources, capability and opportunity.
 So, the socialist market economy doest not
escape the trap of inequality though there are
different political as well as social systems to
deal with that in the world.
 Mr.Dong Xiaoping: let someone rich first, the rest
of other rich later. But how soon, in what way to
balance competition, innovation with equality.
questions
 Cozzens(2006), innovation sometimes
reinforces inequalities and sometimes
undermines them.
 Castells (1996) argues that the increased use of
digital communications technologies to tailor
goods and services to smaller markets supports
a trend toward more flexible workplaces, more
skilled work, and more autonomous workers.
 why equality not going parallel with innovation
 2. Some explanations of widening
of inequality
The byproduct of market economy and government
intervention
 Some regions open and reform earlier than




other regions, so, get riched earlier,
Some sectors open and refom earlier, so, people
in that sector get riched earlier.
State-owned from good to bad, to back
monopoly position, the employees in those
compnaies are much rich than other companies.
industry monopoled by SOE such energy,
financing,telecommunications, get high salery
than private sectors.
Millionares in result of privatelization of economy,
entrepreunship, rent seeking.
Inequality of Resources and
opportunity
 Eastern regions have more resource than
western regions.
 Better education in eastern regions give them
more opportunity to get FDI and well paid jobs.
 Skill person in knowledge intensive industry
such as university, hospitals, financing, etc.
Unequal S&T and education investment
Expenditure for
R&D, billion
RMB
Patents
Application
for invention,
piece
Invention
Patents
Granted,
piece
Revenues
from the
Sale of
New
Products,
billion
RMB
Eastern Region
218.63
86040
15882
23810.1
Middle Region
45.93
15117
3643
4352.37
Western Region
35.75
10189
2711
3070.34
R&D Expenditure (100 million yuan)
250
256.3
200
150
100
50
0
179.8
150.5
128.9
103.8
83.0
79.4
75.2
68.0
54.8
40.4
38.1
37.5
34.2
32.7
32.4
30.1
27.8
17.4
17.0
15.8
12.8
11.2
11.0
7.9
6.4
3.8
2.4
2.4
1.2
0.3
R&D/GDP(%）
0
1
2
3
Beijing
1.32
Guangdong
1.21
Jiangsu
2.06
Shanghai
0.84
Shandong
1.38
Liaoning
1.46
Sichuan
0.80
Zhejiang
2.83
Shaanxi
1.01
Hubei
1.65
T ianjin
0.54
Hebei
0.72
Fujian
0.49
Henan
0.74
Heilongjiang
0.82
Anhui
0.65
Hunan
1.10
Jilin
0.77
Chongqi
0.60
Jiangxi
0.64
Shanxi
0.98
Gansu
0.41
Guangxi
0.45
Yunnan
0.58
Guizhou
0.30
Inner
0.20
Xinjiang
0.62
Ningxia
0.62
Qinghai
Hainan
0.18
0.17
T ibet
4
5
6
7
7.00
 If ordinary innovation comes out from
competition, leading to in inequality, in what
institutes with what other kinds of innovation
can enhance both welfare and equality in a
society?
 What S&T can do to mitigate the process?
3. The measure against
inequality in China
S&T for reducing urban-rural income inequality
 There is a well-established system to diffuse
agricultural technology in the rural areas. There is
variety of extension model, from demonstration,
expert-led collectives, to agricultural ambassador
of S&T. For example, up to 2007, about 45,000
agricultural ambassadors have been send out and
delivered special service to 9 million farmers (Liu,
Wang and Lian, 2009).
Subsidy to agriculture sector
 Government spends huge money on R&D in
agricultural industry. For example, using
technology of hybrid rice, a famous scientist
named Longpin Yun, invented Super-Hybrid Rice.
The technology increased the rice productivity
greatly, from 0.45 kilogram per square meter in
1970s to a level of 1.35 kilogram per square meter
in 2008.
 There is a system to let scientists and engineers to
be vice director for local region specialized on
technology transfer.
Urbanization
 Fast urbanization drives billions of farmers
to live and stay in cities, but urbanization
doest mean innovation. it means that people
will move from a low productivity sector to
high productivity sector.
Grass-root innovation for low
income people
 Many outstanding local businesses rely on
the vast rural market to develop niche
markets, which are usually characterized by
the following—potential growth room,
special groups of customers, no competitors
or being ignored by the competitors.
 Huawei, Lenovo, Haier, etc .
 Company’s effort, innovation for low end market,
Huawei, PC for farmer, Lonovo
 Corporate +farmers: a large corporate to link lot of
famers to diffusing new knowledge: Yili, dairy
company.
 Subsidy to buy equipment for farmers
 Immigration and returnee’s start up in rural areas
Ablity Uprising
Mastering of
technology
core
Global leader
Partical
breakthrough
System design and
structural technology
Rural Niche
Markets
Capturing the
National Main
Stream Market
International
markets
Repaying
the Rural
Niche
Markets
Market
Figure 6 Huawei’s catching up by using grassroot innovation strategy
Strategies
Friendly to SME
 Spark program for TVE
 Entrepreneurship, But it seems that
entrepreneurship relates with culture rather
than by train.
 Low cost to set up new company
 Self-financing system in Zhejiang.
 Subsidy policy
Regional strategy
 Great Western Development. Designed to increase
the economic situation of the western provinces
through capital investment and development of
natural resources.
 Revitalize Northeast China. This plan is to rejuvenate
the industrial bases in the northeastern China. The
core of the program is to revitalize the regions'
traditional industry,
 Rise of Central China Plan .This policy is adopted by
the People's Republic of China to accelerate the
development of its central regions.
 Each has specific S&T and innovation programs.
Homonymous society
 Needs driven S&T strategy
 S&T and innovation for the people, service
the people.
 Diffusion of technology to basic need
products
 More S&T on health care, pollution control,
water supply, save food, etc,
4. conclusion
 The model of “Innovation first, inequality gap
wider” and “diffusion second to narrow the gap”
has not been changed.
 New technology can reduce the absolute
poverty, but cannot reduce the inequality.
 A better welfare system or a better innovation
system, it matters.
 IPR is good for innovation but not good for
reducing the inequality, can we throw it away?
 Thanks