The Wind of the Hundred Days How Washington Mismanaged Globalization Cambridge, Massachusetts, MIT Press, 2000, xxiv + 383 pp., $32.95 (cloth).

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Professor Bhagwati's innovative and wide-ranging contributions to trade theory and development economics have, in Paul Samuelson's words, ushered in "the Age of Bhagwati." Bhagwati has now become a passionate advocate for righting wrongs in the economic policies of both industrial and developing countries, writing extensively on this subject in the popular press. Like Bhagwati's earlier work of the same genre, the present volume is addressed to nonspecialist readers. Presented with clarity, humor, and a light touch, the essays educate readers about complex economic issues and the significance of economic policies that affect their well-being.

Bhagwati deals with several themes, but his central conception is that "the best economy and better society . . . combined both markets and democracy." This implies free trade and freedom of choice in economics and politics and less state interference in economic activity.

By far the most novel theme, and one with far-reaching implications in today's integrated world, is the "asymmetry between the case for free trade and the case for free capital mobility." Bhagwati points out that liberalizing trade and freeing up capital, particularly short-term capital, are distinct activities and that economists and policymakers have erred in treating them as identical. While restrictions on trade in goods will yield efficiency losses, the same cannot be said of capital mobility, because capital flows are often characterized by what economic historian Charles Kindleberger called "panics" and "manias." Bhagwati refers to a voluminous body of evidence showing that while free trade has led to immense efficiency gains across countries, capital mobility does not benefit developing countries unless their financial systems are well developed and their regulatory mechanisms well honed. He is critical of the U.S. administration for its role in influencing the IMF to press for rapid capital account convertibility in emerging and other developing countries. Bhagwati's critique presumably resulted in the IMF's softening of its stance on capital account convertibility over the past two years.

Choosing from a plethora of explanations of the East Asian "miracle," Bhagwati convincingly demonstrates that this phenomenon could be attributed to these countries' pursuit of an export promotion strategy, which led to a sharp rise in investment. He gives short shrift to other, facile theories—for example, that East Asia's growth was purely the consequence of capital accumulation and not technical change (Paul Krugman) or that its explanation lies in the industrial policy of "getting prices wrong" (Alice Amsden and Robert Wade). Bhagwati's analysis challenges the theory that the 1997 East Asian financial crisis was caused by cronyism and, at the same time, makes a meaningful distinction between "rent-creating corruption" and "profit-sharing corruption." The latter, he says, together with the outward orientation of economic policies, propelled East Asia's rapid and sustained growth.

Bhagwati discusses the "reversal of roles," which refers to the way policymakers, politicians, and the so-called spokespeople of civil society often change their positions in policy debates about globalization. During the 1950s and 1960s in industrial countries, such groups publicly sang the praises of open economies, free trade, and a liberal international economic order. In the 1990s, however, they denounced free trade with equal aplomb, arguing that trade with poor countries would produce more poor at home. Bhagwati demolishes this "pauperization" bogey, which he says was spread by the Clinton administration and U.S. politicians. In contrast, during the 1950s and 1960s, intellectuals and politicians in developing countries subscribed to the "malign neglect and malign intent views of trade and investment interactions with the world economy." By the 1990s, their earlier fears about free trade had dissipated, partly because of the perceived successes of the East Asian economies and partly because of the policy conditions attached to financial assistance from the IMF and the World Bank, which encouraged borrowing countries to open their economies and liberalize trade.

This volume shows to advantage Bhagwati's rapier-like wit, amazing command of language (reminiscent of John Maynard Keynes), insight into the innards of social and political processes, and abiding concern for human welfare. The book also testifies to the validity of his statement that "economics is literature with immediacy of experience." He seems to be asking myopic politicians and fear-mongering nongovernmental organizations the world over to shape up, echoing the main character in Philip Roth's Sabbath's Theater: "You can be young once but you can be immature forever." Bhagwati clearly enjoyed writing this book, and readers will certainly take pleasure in reading it.

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William Easterly The Elusive Quest for Growth Economists' Adventures and Misadventures in the Tropics MIT Press, Cambridge, Massachusetts, 2001, 342 pp., $29.95 (cloth).

For the past fifty years, economists have tried to determine how poor countries in the tropics can attain standards of living approaching those of Europe and North America. This quest has been motivated by the striking and often pitiful contrast between the sufferings of the poor and the comforts of the rich. A range of remedies have been advanced or attempted—including foreign aid, investment in machinery, education, birth control, and debt forgiveness—but none has delivered as promised. The poor countries have simply failed to grow as expected. Indeed, the region where poverty was treated most intensively, sub-Saharan Africa, has failed to grow at all, while growth in other regions of the world has been affected by erratic development and sudden crises.


In this stimulating and lively book, Easterly, a senior advisor at the World Bank and former advisor to Finance & Development, argues that the root problem is not a failure of economics but a failure to apply economic principles to practical policy work. Too often, he writes, economists have peddled formulas that violate the basic principle of economics: that private businesses, government officials, and individuals—even aid donors—respond to incentives. If we ensure that all involved have the right incentives, he argues, then development will follow.


Easterly notes the widespread disappointment with the lack of progress that has led disaffected protesters in the West to call for abandoning the quest altogether. This is not acceptable, he stresses: "As long as there are poor nations suffering from pestilence, oppression, and hunger . . . and as long as human intellectual efforts can devise ways to make them richer, the quest must go on."


Written for the general reader, the book will fill an important niche in enlarging public understanding of a vital issue. One of its most attractive features is what Easterly calls his "intermezzos": snapshots of daily life in the Third World, based on his own experience, that are inserted between chapters. These serve to remind us that "behind the quest for growth are the sufferings and joys of real people, and it is for them we go on the quest for growth."

The End of Ownership: Personal Property in the Digital Economy. Aaron Perzanowski and Jason Schultz. MIT Press. 2016.

There can be little doubt that the way we consume a range of information goods has been transformed by digital content delivery. However, as the authors of The End of Ownership: Personal Property in the Digital Economy argue, this transformation has also much more quietly shifted and changed the way we own (or indeed do not now own) the content we pay for.

Really, I should have liked this book as it deals with issues about which I have been thinking for many years, parallelling (without citation) the arguments I previously made about digital rights management (DRM). However, as I have pointed out in reviews on this site and elsewhere, despite the global reach and de-territorialisation of the new/digital economy, US-based writers often imply that little of interest or significance happens outside their own country. Thus, the account this book offers of the important development of intellectual property law in the virtual/digital domain recognises some historical precedents in copyright and patent law in the history of English law, but this concern is limited to its early history in the seventeenth and eighteenth centuries; for contemporary legal developments, there is only US law to worry about! On one level, one might accept that US law has been instrumental in shaping digital economic developments, but equally, as the debates about privacy and Google’s requirement to exercise a ‘right to be forgotten’ suggest, developments in European law have also had some impact.

Leaving aside this myopic analytical approach, what do Aaron Perzanowski and Jason Schultz tell us about the digital and/or ‘sharing’ economy? At the heart of their analysis is the distinction between the exhaustion of rights in the world of physical products and the domain of the digital. This is to say, the argument is built on the difference between your rights as a consumer subsequent to purchasing a physical artefact and your (lack of) rights when such a transaction takes place digitally. So, once you have bought a physical book, the rights of the copyright owner in its physical form are exhausted. Hence, for centuries there has been a thriving market in second-hand books with no ability of copyright owners (publishers or authors) to control this secondary market. Likewise, for all sorts of goods from music recordings to technological products, once sold in their physical form the initial rights are exhausted and the new owner is able to use, dispose or do what they want with their purchase (within other social and legal limits, of course). However, as the authors point out, this is very much not the case in the digital realm.
Image Credit: (Travis Juntara CC BY 2.0)

Despite the often deployed language of consumerism (‘buy now’, ‘own this new…’), the authors point out that in the digital economy, there is a distinct lack of ownership rights accorded to the ‘purchaser’ by the seller. Rather, in most cases, it turns out that ownership is actually a form of conditional lease. The authors spend most of the book detailing a range of examples of how this plays out in the contemporary economy. For instance, their account of the highly detailed (and seldom read) End User License Agreement (EULA) parallels and cites Margaret Radin’s careful and detailed analysis of how unread license agreements allow unfair terms to be spread around the digital economy, leaving users with fewer rights to decide on the use of their ‘assets’ than they might have supposed.

Elsewhere, the authors examine cases of e-books that were suddenly repatriated to their seller when a copyright issue arose as well as the question of who owns digital libraries when their user dies. Indeed, this is a book that is full of interesting, albeit almost exclusively US-focused, examples of how the sharing economy undermines older ideas of ownership. For those working in the field of digital political economy, the book provides a useful store of anecdotes to enliven accounts of particular developments. Unfortunately, it remains relatively light on critical analysis.

While the authors conclude that the old system of individualised property rights served the old economy well, and as such what is needed is legal action to move the ‘sharing economy’ (back) to this preferred ownership model, there is little discussion about how this might happen other than through judicial activism, which is to say the book really lacks any account of political agency. In my own discussion of these issues, I deployed Karl Polanyi’s notion of the double movement to argue that there was a clear normative move to reject through non-compliance the sorts of shifts that Perzanowski and Schultz focus on. Here we might identify organised ‘piracy’ through peer-to-peer sharing sites, but also the challenge mounted by open source/open access activists to the proprietary models on which much of the business described in this book rests. Likewise, usage of sites like Academia.edu and other research communication portals has offered researchers opportunities for widely (and freely) disseminating formally copyrighted versions of their own work, forcing journal publishers to adopt a range of compromises on what versions of publications might be shared and when. Thus, lurking behind the authors’ account in places is the recognition that consumers have not been merely dupes taken for a ride by the sharing economy, but have at times adopted practices of resistance that have prompted strategies of compromise and the rebalancing of rights.

The difficulty is that this is neither foregrounded in the account nor is the question of how the new economy, the sharing economy, might represent a site of potential social domination or exploitation and a realm of potential challenge. The authors do not locate their various examples and sectoral accounts within a wider understanding of the manner in which the new economy might be developing, driven not only by technological innovation but also by corporate interests with specific strategic aims around profit-maximisation and market control.

Thus, while there is much of interest in the details set out here, the failure to see beyond the USA and the lack of an overarching view of the political economy of these developments undermine the contribution this book could make to a key contemporary debate about what the sharing economy might imply. That the authors are lawyers might go some way to explaining why there is limited political economy here, although there is also little in the way of developed analysis of the manner in which corporations have sought to shape the law. However, they must be aware that the digital economy, almost by definition, cannot be limited to one state, and thus the myopia as regards the developments discussed renders this account not only analytically lightweight but also frustratingly parochial.

Driverless: Intelligent Cars and the Road Ahead. Hod Lipson and Melba Kurman. MIT Press. 2016.

Driverless: Intelligent Cars and the Road Ahead. Hod Lipson and Melba Kurman. MIT Press. 2016.

Driverless cars, to echo John Urry, are ushering in a new wave of mobility and innovation. It is not only leading motor manufacturers who are integrating smart and sensor-based technologies into cars, but Google, Uber and Tesla are also pioneering full automation capabilities. Driverless cars are going be more than a disruptive innovation; they are also likely to be socially and culturally transformative.

The future of transportation is one of the themes examined by Hod Lipson and Melba Kurman in Driverless: Intelligent Cars and the Road Ahead. Lipson and Kurman make this bold prediction:


Driverless cars will look different, both inside and outside. The steering wheel will disappear, the dashboard will become flexible workspace, and the car’s cabin will contain whatever people need for their on-board leisure and work activities. Outside, cars won’t need side mirrors or tail lights (266).

They do, however, stress that there is ‘no guarantee that such a vehicle will actually appear’ (255). In a little over 300 pages, the authors introduce readers to the culture of driving and the benefits of driverless transportation (Chapters One-Two); the policy implications for transport infrastructure (Chapter Three); the intersection between software and innovation culture (Chapter Four); the technological challenges encountered in mirroring the human brain’s capability to receive, classify and create meanings from information perceived (Chapter Five); the implications of driverless technology for the automobile industry (Chapters Six-Ten); and the interaction between culture, technology policy and regulation (Chapters Eleven-Twelve).

Even though the book is US-centric, the discussion on regulatory, infrastructure and mobility issues chimes well with wider public and policy interests in harnessing the potential of driverless car technologies. For instance, the UK Government is intent on delivering on its promise to reform our transport infrastructure and lead on developing driverless technologies. A review of current regulatory frameworks was conducted in 2015, and plans to pass a Modern Transport Bill were first announced in the Queen’s Speech on May 2016.
Image Credit: Google Self-Driving Car (smoothgroover22 CC BY SA 2.0)

Driverless is well-researched, and the ideas are set out in a clear and accessible manner. What the authors do really well is integrate their unique insights on a range of topics. Consider, as an example, the predominant focus of policymakers and industry on the human driver in our existing regulations and laws. Under the 1968 Vienna Convention on Road Traffic, “[e]very driver shall at all times be able to control his vehicle’. The Convention also allocates responsibility to the driver of vehicles, with Article 8 (2) stipulating that they possess the knowledge and skill to ensure the vehicle is driven without exposing the driver or others to danger or harm. Within the UK, both the Road Traffic Act 1988 (as amended) and the Highway Code also reinforce the view of a human driver being in control.

Increased automation thus blurs the line between driver-led and driverless technologies. Here, readers will benefit from the authors’ account of the six levels of autonomy as described by the Society of Automotive Engineers and the default rule for addressing human-machine interaction. Driverless technology builds on the advanced motoring technologies that already assist drivers in operating vehicles. Many motor vehicles come equipped with technologies such as Anti-Lock Braking Systems (ABS), cruise and adaptive speed control and parking sensors. ABS, it should be noted, does not actually require the human driver to provide instructions or direct control. Such technologies therefore already involve sophisticated software that processes information and directs the driving process.

While the focus of driverless technology tends to be technical, the authors also remind us of what is involved when we drive cars. It is amazing when we consider how humans deploy motor and cognitive skills to negotiate traffic lights, new situations on the road and pedestrians and to move from one location to another with speed: ‘Human eyes stream data to our brain so smoothly we don’t have to consciously pick apart the visual scene to make sense of it’ (89).

The analysis therefore brings to life the challenges posed in moving closer towards full automation, the risk contingencies and regulatory actions for likely use scenarios. According to Lipson and Kurman, the critical challenge ‘that plagues rule-based AI software is that without a robust method to classify every object a car might encounter, it is impossible to write rules to guide the car’s response’ (89). The authors provide a useful account of the algorithmic processes that enable driverless technologies to undertake their object recognition and sensor capabilities (87-88). The technical task for constructing highly reliable algorithms is spelt out:


software that reads streams of data from visual sensors has to do more work. A stream of visual data is at heart a numerical array. Machine-vision software processes these numerical arrays with aplomb, but is incapable of understanding the visual scene the numbers depict, a conunundrum that cuts to the heart of the artificial-intelligence research (89).

Creating a car that has comparable perception that enables the software to ‘see’ what the human driver does is an ongoing dilemma, and we can expect regulators to continue with trialling driverless technologies – platooning, pods and taxis.

The book is also sprinkled with vignettes and accounts of societal and infrastructure challenges. There is, for example, an interesting exchange between Tesla’s CEO, Elon Musk, and George Hotz recounted in the book. Hotz claims that it would not be overly burdensome for individuals to acquire toolkits that enable them to construct autonomous cars that operate at a very high level of accuracy. Musk’s response is that the technological problem is not achieving 99 per cent accuracy but 99.9999 per cent. At 70 mph, Musk mused that this difference could be problematic (85-88). Not surprisingly, issues regarding liability, risk distribution and insurance remain high on the regulatory agenda.

The book will also be of interest to those who wish to use the coverage of driverless technology as a springboard to consider wider subjects. For example, driverless technology is unlikely to leave the long-established transportation industry and infrastructure untouched. What are we to make of the system of ‘lean production’ and ‘economies of scale‘? As I read accounts of the potential of driverless technology and its benefits for human drivers and the environment, I cannot help but wonder about how driverless cars will redefine car ownership culture as objects of identity and status.

Related to driverless technology is the issue of mobility, not simply in terms of assisting elderly and disabled citizens but also as a value integral to driving. Regrettably, we may have to accept that the price of convenience and personalisation is that owners of driverless cars become targets for the advertising and marketing industry. Will society, and drivers in particular, embrace driverless cars in the way smartphones and wearable technologies have been seamlessly interwoven into the fabric of society, despite serious issues about privacy and surveillance? The authors’ feelings on this are not difficult to glean as they emphasise the social value of technologies that produce practical outcomes for individuals and the economy. I think the jury is out on this one, but one thing should be apparent: the impetus for driverless cars cannot be separated from our platform dominated ecosystem, which continues to redefine the relationship between individuals, industry and the state. The convergence between the rhetoric of a mobile society underpinned by intelligent technologies and web-based platforms should reignite the discourse about governmentality, power and mobility.

Finally, I cannot end this review without a brief reference to one of my favourite chapters in the book, which is devoted to deep learning. Deep learning in essence involves software to draw on information resources to solve problems and generate solutions. While mindful that there are privacy and safety risks, the potential to assist driving in hostile or difficult conditions should not be dismissed readily. The chapter is particularly informative – processes, concepts and methods are clearly explained to show readers how data from the environment can be aggregated to create new knowledge.

Driverless: Intelligent Cars and the Road Ahead offers insights into how intelligent technologies will transform industry and society. It is written for a non-specialist audience and many will find the discussion of the topics informative and come away with their understanding significantly enhanced. There is more to driverless cars than the overburdened ‘trolley problem‘. Those interested in the environmental and safety benefits of intelligent systems for transport, the role of agencies in creating regulatory infrastructures that balance innovation and safety needs and the challenges for designing urban spaces for modern transportation will be reminded of the value of communicating the paradoxes of the ‘black box’ in a way that is accessible to the public and policymakers.

China’s Next Strategic Advantage: From Imitation to Innovation. George S. Yip and Bruce McKern. MIT Press. 2016.

There are some common factors that lead to innovation for all countries in the world. In this new book, China’s Next Strategic Advantage: From Imitation to Innovation, George S. Yip and Bruce McKern outline the special characteristics of China’s path from imitation to innovation.

Four factors have driven innovation in China, which fall into two categories: customers and culture; and capabilities and cash. Besides this, enablers of innovation on both the supply and demand side lead local companies and MNCs to innovate. Supply enablers include the very large number of relatively low-cost engineers and scientists (especially the increasing number of returnees educated abroad), government support, the famed entrepreneurial spirit of Chinese business people and evolving local Internet-related industries extensively funded by the Chinese government. Demand enablers include the rapid growth of China’s market, multiple market spaces, a lack of tradition in terms of customers’ spending habits resulting from the discontinuity created by the early years of the Communist system, China’s need for simpler and cheaper products and fast-moving large-scale government projects.

The main method of this book is the case study. It uses vast cases and mini-examples to vividly illustrate the specific features of local companies and multinationals in China on their way to innovation. The samples for different topics usually cover a wide range of stakeholders. For example, on the subject of open innovation, the interviewees include representatives from Chinese companies, foreign multinational companies in various sectors, major Chinese universities, China’s Ministry of Education and Ministry of Science and Technology, the Science and Technology Committee of the Shanghai Municipal Government and the China Academy of Sciences. By conducting vast interviews with numerous representatives, the book is rich in detailed examples for readers to explore.

For example, China’s Next Strategic Advantage is useful for companies running businesses in China as it provides specific instances of the keys to success in ordinary operations – including a company’s relationship with the government. The book suggests that to be successful in China’s market, one needs to be embedded in China’s innovation ecosystem. That includes applying for funding from the local government first, and then from the central government. Another example relates to Chinese talents, who might be more conservative in speaking their ideas. Company managers may find the following practice useful: having these employees exchanged to experience working in headquarters in other countries or organising the brainstorm meeting in a different way.
Image Credit: Beijing CBD – Jianwai SOHO, Yintai, WTC, Jingguang (CobbleCC CC BY SA 3.0)

Besides these cases, the book utilises indicators of innovation to quantitatively illustrate the growth in the innovation performance of China. It numerates several global rankings to indicate the position of Chinese companies in terms of their innovation investments and outputs, such as the 2014 EU Industrial R&D Investment Scoreboard and the Thomson Reuters Top 100 Global Innovators list. To show the innovation output of China, this book chooses four groups of indicators: scientific scholarship; China’s share of global high-technology manufacturing; its share of global high-technology exports; and China’s ranking on indices of innovativeness. Researchers may raise some interesting questions for further study from those numbers: for example, what does the distribution of the industrial R&D investment look like for Chinese companies? And what hinders Chinese companies from increasing this?

A strand of research related to this book is the role of the Chinese government in promoting innovation in China. Yip and McKern recognise that the increasing number of returnees play a very important role in promoting the innovative capabilities of China and point out the value of entrepreneurial spirit in enabling innovation. These are analysed by this book more as a fact than a strategy actively promoted by the government, though it acknowledges the effects of government support. Behind the increasing amount of relatively low-cost engineers and scientists, it is the national strategy that expands the scale of higher education and adopts policies that can attract scientists educated abroad to return to work in China. Similarly, the large number of start-ups that are born and grow in an increasingly friendly environment surrounded by stimulating policies from the government. Hence, it may enrich the book to further explore the interaction effects of public policies with the low cost of high-level labour as well as the entrepreneurial spirit, just as it does with other characteristics such as the high flexibility, adaptability and inclusiveness of Chinese markets. For example, governments have played an important role in making the market able to tolerate failures in the trials of electric cars.

The book also assumes that government organisations and state-owned enterprises need to be changed to facilitate the formation of a competitive and open system. However, MNCs and local private companies enjoy special policies from the Chinese government for certain time periods. This poses the question of what ‘fairness’ really means for such a system. To have one type of entity enjoy the same policies as another type is one way of understanding fairness. Alternatively, companies with special characteristics can enjoy policies specific to their features and needs so that they can compete with other companies of similar capabilities at the same level.

State-owned enterprises are criticised for their lower productivity. However, using productivity or innovation outputs to compare the performance of state-owned enterprises with that of other types of companies may be slightly inappropriate. Some innovation and improvement in productivity may need more time and investment both in capital and labour, while the know-how produced during this process can be easily transferred to other companies within a short time. As a result, it may be observed that other companies have better productivity and innovation performance. Therefore, when evaluating the benefits and costs of companies such as state-owned enterprises, it is necessary to include the spillover effects.

In all, built on vast and detailed interviews, news reports and existing literature, China’s Next Strategic Advantage highlights the success of China’s innovative strategies and practices and reveals the keys to the successes of various types. The authors argue that there is much for MNCs to learn from China and there is an urgent need for them to do so. Readers of various backgrounds may find this book useful. Practitioners – both company managers and employees – may benefit from guidelines for strategies towards innovation complemented by the vast cases and mini-examples. Researchers may gain insights and be inspired by the data for their own research. The book is also valuable to policymakers at different levels, who can learn a great deal of what is needed from the demand side.

China’s Next Strategic Advantage: From Imitation to Innovation. George S. Yip and Bruce McKern. MIT Press. 2016.

There are some common factors that lead to innovation for all countries in the world. In this new book, China’s Next Strategic Advantage: From Imitation to Innovation, George S. Yip and Bruce McKern outline the special characteristics of China’s path from imitation to innovation.

Four factors have driven innovation in China, which fall into two categories: customers and culture; and capabilities and cash. Besides this, enablers of innovation on both the supply and demand side lead local companies and MNCs to innovate. Supply enablers include the very large number of relatively low-cost engineers and scientists (especially the increasing number of returnees educated abroad), government support, the famed entrepreneurial spirit of Chinese business people and evolving local Internet-related industries extensively funded by the Chinese government. Demand enablers include the rapid growth of China’s market, multiple market spaces, a lack of tradition in terms of customers’ spending habits resulting from the discontinuity created by the early years of the Communist system, China’s need for simpler and cheaper products and fast-moving large-scale government projects.

The main method of this book is the case study. It uses vast cases and mini-examples to vividly illustrate the specific features of local companies and multinationals in China on their way to innovation. The samples for different topics usually cover a wide range of stakeholders. For example, on the subject of open innovation, the interviewees include representatives from Chinese companies, foreign multinational companies in various sectors, major Chinese universities, China’s Ministry of Education and Ministry of Science and Technology, the Science and Technology Committee of the Shanghai Municipal Government and the China Academy of Sciences. By conducting vast interviews with numerous representatives, the book is rich in detailed examples for readers to explore.

For example, China’s Next Strategic Advantage is useful for companies running businesses in China as it provides specific instances of the keys to success in ordinary operations – including a company’s relationship with the government. The book suggests that to be successful in China’s market, one needs to be embedded in China’s innovation ecosystem. That includes applying for funding from the local government first, and then from the central government. Another example relates to Chinese talents, who might be more conservative in speaking their ideas. Company managers may find the following practice useful: having these employees exchanged to experience working in headquarters in other countries or organising the brainstorm meeting in a different way.
Image Credit: Beijing CBD – Jianwai SOHO, Yintai, WTC, Jingguang (CobbleCC CC BY SA 3.0)

Besides these cases, the book utilises indicators of innovation to quantitatively illustrate the growth in the innovation performance of China. It numerates several global rankings to indicate the position of Chinese companies in terms of their innovation investments and outputs, such as the 2014 EU Industrial R&D Investment Scoreboard and the Thomson Reuters Top 100 Global Innovators list. To show the innovation output of China, this book chooses four groups of indicators: scientific scholarship; China’s share of global high-technology manufacturing; its share of global high-technology exports; and China’s ranking on indices of innovativeness. Researchers may raise some interesting questions for further study from those numbers: for example, what does the distribution of the industrial R&D investment look like for Chinese companies? And what hinders Chinese companies from increasing this?

A strand of research related to this book is the role of the Chinese government in promoting innovation in China. Yip and McKern recognise that the increasing number of returnees play a very important role in promoting the innovative capabilities of China and point out the value of entrepreneurial spirit in enabling innovation. These are analysed by this book more as a fact than a strategy actively promoted by the government, though it acknowledges the effects of government support. Behind the increasing amount of relatively low-cost engineers and scientists, it is the national strategy that expands the scale of higher education and adopts policies that can attract scientists educated abroad to return to work in China. Similarly, the large number of start-ups that are born and grow in an increasingly friendly environment surrounded by stimulating policies from the government. Hence, it may enrich the book to further explore the interaction effects of public policies with the low cost of high-level labour as well as the entrepreneurial spirit, just as it does with other characteristics such as the high flexibility, adaptability and inclusiveness of Chinese markets. For example, governments have played an important role in making the market able to tolerate failures in the trials of electric cars.

The book also assumes that government organisations and state-owned enterprises need to be changed to facilitate the formation of a competitive and open system. However, MNCs and local private companies enjoy special policies from the Chinese government for certain time periods. This poses the question of what ‘fairness’ really means for such a system. To have one type of entity enjoy the same policies as another type is one way of understanding fairness. Alternatively, companies with special characteristics can enjoy policies specific to their features and needs so that they can compete with other companies of similar capabilities at the same level.

State-owned enterprises are criticised for their lower productivity. However, using productivity or innovation outputs to compare the performance of state-owned enterprises with that of other types of companies may be slightly inappropriate. Some innovation and improvement in productivity may need more time and investment both in capital and labour, while the know-how produced during this process can be easily transferred to other companies within a short time. As a result, it may be observed that other companies have better productivity and innovation performance. Therefore, when evaluating the benefits and costs of companies such as state-owned enterprises, it is necessary to include the spillover effects.

In all, built on vast and detailed interviews, news reports and existing literature, China’s Next Strategic Advantage highlights the success of China’s innovative strategies and practices and reveals the keys to the successes of various types. The authors argue that there is much for MNCs to learn from China and there is an urgent need for them to do so. Readers of various backgrounds may find this book useful. Practitioners – both company managers and employees – may benefit from guidelines for strategies towards innovation complemented by the vast cases and mini-examples. Researchers may gain insights and be inspired by the data for their own research. The book is also valuable to policymakers at different levels, who can learn a great deal of what is needed from the demand side.