China shows that competition leads to innovation, something the West seems to have forgotten

Edmund S. Phelps says China, like Western countries before, has realised that ‘zeal’ isn’t enough – society benefits most when competition is encouraged

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MakeX, a national competition featuring robots designed by primary and middle school students took place at the Songgang Sport Centre in Shenzhen last November. Photo: Nora Tam

Published: 5:28pm, 6 Mar 2018Updated: 5:28pm, 6 Mar 2018

From the early 19th century to the early 20th century, Western countries attributed their economic growth to the discoveries of “scientists and navigators”. A country needed only the “zeal” to develop “obvious” commercial applications, and build the facilities to meet demand for new products.

Until recently, the Chinese believed the same thing. But now, Chinese businesspeople and entrepreneurs are increasingly showing not only the entrepreneurial drive to adapt to new opportunities, but also the desire and capacity to innovate for themselves, rather than copying what’s already out there.

Indeed, more and more Chinese companies are realising that they must innovate in order to get – and stay – ahead in the global economy. Several companies – notably Alibaba, Baidu and Tencent – made breakthroughs by offering digital-age infrastructure that facilitates innovative activity. And industrial firms have recently moved into robots and artificial intelligence.

For its part, China’s government is evidently supportive of Chinese businesses developing a capacity to produce indigenous innovations. It no doubt recognises that such innovations are all the more valuable when innovation remains weak in the West, where growth in total factor productivity has continued its long slowdown.

China shows that competition leads to innovation, something the West seems to have forgotten

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Edmund S. Phelps says China, like Western countries before, has realised that ‘zeal’ isn’t enough – society benefits most when competition is encouraged

Edmund S. Phelps says China, like Western countries before, has realised that ‘zeal’ isn’t enough – society benefits most when competition is encouraged