Dynamics of China’s provincial-level specialization in strategic emerging industries

Abstract

This paper examines the dynamics of technological specialization in “strategic emerging industries” (SEIs) within each of mainland China’s 31 provinces and the likely effectiveness, based on the experiences of Taiwan and South Korea, of the provinces’ strategies for developing these industries. Grounded in economic decentralization theories, the empirical method employed includes analyzing the scores on an SEI “Specialization Promotion Index” per each province alongside several analytics of invention patent data from each province in the seven SEIs newly designated by the central-level government as of 2010. The data is quantitatively analyzed according to four groups of indicators based on the following specialization-relevant concepts: comparative advantages and technological capabilities; economy size and income; technological uncertainty and lifecycles; and latecomer entry into complex technologies where knowledge is most cumulative. The analysis finds that China’s system of economic decentralization has partially worked to ensure provincial industrial policymaking is effective, whereby a notable number of provinces are seemingly pursuing SEI development strategies (in terms of SEI selection and promotion) that may enable catch-up. However, paradoxically, at the same time, the system appears to sometimes facilitate provincial SEI development strategies that are quite risky or even likely ineffective.