IEMS Newsletter - Fall 2016 - page 1

Over the last century and a half, global technological leadership
has shifted from Great Britain to the USA. In this seminar
supported by EY and the HKUST Institute for Public Policy and
organized by HKUST IEMS,
Naubahar Sharif
, Associate Professor
of Social Science and Faculty Associate of IEMS at HKUST, argued
that China is positioning itself to assume global leadership in
technology within the coming few decades.
Prof Sharif identified three sources of competitive advantage for
China’s ascent to leadership in global technology: its massive
domestic market, its strong state capacity and willingness to
employ state-sponsored industrial policy and government support,
and the process of globalization that continues to transform
markets worldwide.
With respect to the government’s support for industrial research
and technology development, Prof Sharif pointed to China’s
spending on research and development (R&D) which now
outpaces overall economic growth, placing China behind the
United States as the world’s second largest spender on R&D
activities. China now has over 3.2 million R&D personnel, and is
currently the world’s largest producer of tertiary and post-tertiary
students in science and engineering. Moreover, China now ranks
second in the world in research output as measured by papers
published in research journals, and third in terms of patent filings
with the World Intellectual Property Office.
China as the World’s Technology Leader in the 21
Century: Dream or
HKUST IEMS and IPP – EY Hong Kong Emerging Market Insights Series (2016.04.20)
China’s autocratic system of government was also argued to be
a boon to the future of China as a global technology leader,
with government-led initiatives bolstering a range of strategic
industries including wind turbines, telecommunications, advanced
manufacturing, and biotechnology. Prof Sharif argued that China’s
current stage of technological development resembles that of
the post-World War II-era United States, when massive public and
military investment financed early-stage innovative technologies
such as radar, synthetic rubber, the microchip, GPS, and the
With these strengths, the intensified forces of globalization will
help China extend its reach abroad. Prof Sharif commented
that too few policymakers and financial elites outside China
anticipate the rise of Chinese multinationals to positions of global
technological leadership, underestimating the
power of China’s advantageous position. Prof
Sharif contends that Chinese companies will
move beyond their traditional reliance on low
factor-input costs and will continue to scale the
value-added chain well into the future.
Video recording and presentation slides available at
Director’s Message
Albert Park
Promoting innovation is a top priority
for emerging markets, and was a
focus of many of the events organized
by HKUST IEMS in the first half of
2016. In an Emerging Market Insights
Series presentation, Naubahar Sharif
(HKUST) presented an optimistic view
of China’s potential to become a
global technological leader. However,
in his academic seminar Zheng
Michael Song (CUHK) warned that
much of China’s R&D resources are
misallocated. In another policy talk,
Varun Sivaram (US Council on Foreign Relations) expressed
optimism that new international commitments to fund clean
energy innovation at the Paris Climate Change Conference could
lead to a more environmentally sustainable future if international
coordination is effective. In another academic seminar, Utpal
Bhattacharya (HKUST) presented cross-country research finding
that policy certainty is much more important than policy content
for promoting innovation. Several of the IEMS research grants
awarded in 2016 also support research on innovation, with
topics including the Pearl River Delta as an emerging Silicon
Valley, the impact of monitoring on entrepreneurial success,
and the role of agency in firm innovation in China. Of course,
the Institute also sponsored events and research addressing a
wide variety of other topics affecting emerging markets such as
governance, corruption, protection of intellectual property rights,
vocational education, China’s Belt and Road initiative, corporate
governance, and consumer behavior. HKUST IEMS is also happy
to welcome six new Faculty Associates and several new post-
doctoral fellows who will all contribute to the Institute’s research
agenda on emerging markets.
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