Dynamics and Factors of Innovation Gap Between the European Union and China

Abstract

The article focuses on the problem of innovation gap in the world economy, as there are in general countries with developed national innovation systems, playing the role of technology leaders, and those with developing innovation systems, acting as innovation followers. Western European economies belong usually to the first group whereas China is traditionally classified in the second group; however, the analysis conducted in this study reveals a continuous catch-up process of this country towards the European Union in terms of the level of innovativeness of the economy. The purpose of this paper is to measure the dynamics of innovation gap between China and the EU average, and to identify the determinants of its evolution. Although for most of the analyzed indicators related to innovation, China’s performance is much below the EU average, the growth rates for Chinese economy in 2008–2018 have been higher than these of the EU, indicating convergence process. The key to development success in China lies in closing the technological gap by importing existing technology, and strengthening internal capabilities to utilize and improve on those technologies. Different reasons for China’s economy improvement in terms of innovativeness are analyzed, including external factors (e.g., foreign direct investments, which are concentrated mostly in eastern provinces, and associated technology transfer) and internal aspects (like science, technology and innovation policy, investment in research and development, and emergence of innovative regional clusters). The conclusion is that dynamic processes of increasing innovative potential of China provide with a solid fundamental for further convergence and diminishing innovation gap between this country and the European Union.

Principal components of innovation performance in European Union countries

“…The EIS is frequently used in the literature for ranking and assessing the level of innovation in European countries (e.g. Kowalski, 2020;Onea, 2020;Stojanovska & Madzova, 2018). The annual EIS provides a comparative assessment of the research and innovation performance of the EU member states and selected non-EU countries.…”

“…The complicated character of innovation has led to the development of a variety of measurement approaches and methodologies presented in the theory of innovation and applied in practice. However, no single universal method has yet been agreed upon, although numerous approaches are used (Kowalski, 2020). No consensus as to which indicator should be used to measure innovation has been reached either, although extensive discussions have been held in this respect.…”

“…focus on changes over time (e.g. Kowalski, 2020) or include research on the causal relationship between innovation, financial development, and economic growth (e.g. Mtar & Belazreg, 2020).…”

The Experience of European Researchers in China: A Comparative Capital Advantage Perspective

“…First, diminishing opportunities and increasing competition in Europe's academic labor market have pushed many European researchers to seek more attractive career destinations elsewhere (Williams, 2016). Second, China appeals to some Western/European researchers, due to its rising leadership in science and technology (Basu et al, 2018), its status as the world's largest source of scientific articles (Tollefson, 2018), and the second-highest level of spending on research and development (UNESCO, 2018), which result in further convergence of innovation gap between China and the European Union (EU) (Kowalski, 2020). Third, there has been growing interest among both the EU and China in science and innovation cooperation at multiple levels, such as governments, institutions, and individuals (Cai et al, 2019).…”

Moderate Innovator Trap—Does the Convergence of Innovation Performance Occur in the World Economy?

“…There are different measurement methodologies used in different international comparative studies, out of which one of the most popular was developed in the annually published report entitled the European Innovation Scoreboard (European Commission 2019), in which the Summary Innovation Index (SII) is formulated. This is an example of a composite indicator approach, which reflects both the innovative ability and innovation position of an economy (Kowalski 2020a). The Summary Innovation Index consists of 27 indicators describing, e.g., scientific capabilities, Research & Development expenditure, or intense knowledge-rich activities.…”