China's National Innovation System Approach to Participating in Information Technology: The Innovative Recombination of Technological Capability

This paper examines the development of the Chinese electronics and information industry (IT) during the 1980s and the first half of the 1990s, aimed to explain, from the perspective of endogenous factors, how a less developed economy gets access to the so called information revolution in a period with dramatic changes in technological, institutional and policy aspects entailed by market reform and trade liberalization. The endogenous factors are analyzed as embodied in a national innovation system, they interact with each other in response to the challenges and opportunities coming from opening to international participation and moving in market competition. The paper suggests a different approach of IT development emerged from the Chinese experiences which is more application-driven, in contrast to the early experiences in the first tier of 'Newly Industrializing Economies' (NIEs) which began with electronics manufacturing, and was more export-led. Capability accumulations from the past investment and the widespread diffusion of the related technology are identified attributable for the new IT development trend. The paper calls for attention to the 'innovative recombination of technological capability' that characterizes the application-driven approach in which accumulated capabilities are dynamically combined with the newly learned, a process that involves radical institutional restructuring and intensive technological learning.