Columbia International Affairs Online: Working Papers

CIAO DATE: 08/2010

Innovation and the Visible Hand: China, Indigenous Innovation, and the Role of Government Procurement

Nathaniel Ahrens

July 2010

Carnegie Endowment for International Peace


Indigenous innovation has become the greatest immediate source of economic friction between the United States and China. This trend is not unique to these two countries; policy makers globally are actively trying to stimulate domestic innovation. The burgeoning markets for biotech and environment-related products and services and, potentially even more important, countries' efforts to emerge from the global economic slowdown all reinforce this trend. Mindful of this global scene, China has made indigenous innovation one of the core elements of its attempt to make a structural shift up the industrial value chain.