Complementary innovation systems for catching-up in China

This paper discusses what kind of national innovation system (NIS) is built up inChina and whether the NIS is helpful for China to catch up. Our researchmethodology is based on the combination of new growth theory with the NIStheory and our involvement in OECD research project about Chinese NIS. We find that Chinese NIS is composed of two complementary systems, namely FDI-basedinnovation system and indigenous innovation system. Both systems arefound to have a positive influence on attaining China's catching-up objective butindigenous innovation system seems not as influential as FDI-based innovationsystem for the moment. We suggest that Chinese NIS needs to be further shapedfor improving the absorption and innovation capability of domestic firms and forstrengthening university-enterprise-research institute interactions.