The territorial dynamics of innovation in China and India

This paper analyses the geography of innovation in China and India. Using a tailor‐made panel database for regions in these two countries, we show that both countries exhibit increasingly strong polarisation of innovative capacity in a limited number of urban areas. But the factors behind this polarisation and the strong contrasts in innovative capacity between the provinces and states within both countries are quite different. In China, the concentration of innovation is fundamentally driven by agglomeration forces, linked to population, industrial specialisation and infrastructure endowment. Innovative areas in China, rather than generate knowledge spillovers, seem to produce strong backwash effects. In India, by contrast, innovation is much more dependent on a combination of good local socioeconomic structures and investment in science and technology. Indian innovation hubs also generate positive knowledge spillovers to other regions.