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Innovation-DrivenDevelopmentinChina:Catch-UpandBeyond

WuXiaobo,andWuDong*

SchoolofManagement,ZhejiangUniversity,Hangzhou,China

Abstract:Sincetheadoptionofthereformandopening-uppolicyin1978,Chinahaspursuedaninnovation-drivendevelopmentstrategy.Afterdecadesofcatchingupwithadvancednations,Chinaistakingtheleadincertaintechnologicaladvancementsandshiftingfromdynamicsecondaryinnovationsunderopenconditionstooriginalinnovationsatahigherlevelofopenness.Inanewroundoftechnologicalandindustrialrevolutions,shortertechnologicallifecyclesandever-changingtechnologicalparadigmspresentastrategicwindowofopportunities.Basedonourreviewoftheemergingdrivingforcesofsmartmanufacturingandunicorns,wesuggestthatChinaurgentlyneedstodevelopanewnationalinnovationsystemtohelpitscompaniestaketheleadandbypasstheconstraintofexistingtechnologyparadigmstoseizeemergingopportunities.ThispaperprovidesatheoreticalguidanceforChina’sinnovation-drivenhigh-qualitydevelopment.Lookingahead,wesuggestthatinnovation-drivendevelopmentmustadapttorapidlychangingtrends.

Keywords:Innovation-drivendevelopment,paradigmshift,technologicalcatch-up,beyondcatch-up

JELClassificationCode:O35

DOI:10.19602/j.chinaeconomist.2023.07.04

Inits125thanniversaryseries,Scienceposed125ofthemostdifficultquestionsinglobalscience.Onequestionthatcameupwas“Whydosomecountriesgrowandothersstagnate?”(Kerr,2005).Ingeneral,developingnationsarelesstechnologicallyadvancedthandevelopednationsandmustlearnfromdevelopednationsinordertocatchup.Despitethepersistenceofthislearningprocessandtheconstantprogressofdevelopingnations,therearestillsometechnologicalgapswithdevelopednations.Incontrasttotheunfortunate“middle-incometrap”thatbefellsomeLatinAmericanandSoutheastAsiannations,Chinahaslargelysucceededinclosingitstechnologicalgapwithadvancednations,andincertaindomainshasevenoutperformedthem.China’seconomicgrowthmarvelisbothtypicalandunique,andisdifficulttobeexplainedusingtraditionalWesterntheories.WhatfactorsareresponsibleforChina’seconomicgrowth?Sincereformandopening-up,theinnovation-drivenemergenceofcorporatechampionsledbyHuaweihasilluminatedthisquestion.

1.AchievementsofInnovation-DrivenDevelopment:EconomicPerformancesinceReformandOpening-up

1.1InnovationasthePrimaryDrivingForceofGrowth

*CONTACT:WuDong,e-mail:wudong@.

Acknowledgement:ThispaperresultsfromtheMajorProjectoftheNationalSocialScienceFundofChina(NSSFC)“ResearchontheNationalInnovationSystemFocusedontheBreakthroughsinCoreTechnologiesinKeyFields”(GrantNo.21&ZD131).

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Sincetheinceptionofreformandopening-upin1978,China’seconomyhasmaderemarkablestridesandmaintainedahighgrowthrate.From1978to2022,China’sGDPgrowthaveraged9.5%,surpassingtheglobalaveragebyawidemargin.AsdepictedinFigure1,Chinaiscurrentlythesecond-largesteconomyintheworldandisrapidlyclosinguptotheUnitedStates,theworld’slargesteconomy.Chinaproactivelydevelopsinternationaltrade.SinceitsentryintotheWTO,China’sexportshavesteadilyincreased.In2022,China’stotalimportandexportvolumesofgoodsamountedto42.07trillionyuan,withexportsofgoodsrepresentingcloseto15%oftheglobalmarketshare.Chinahasbeentheworld’slargestcommoditiestradingnationforsixyearsrunning.With666typesofindustrialactivityin207subcategoriesof41industrialcategories,ChinaistheonlycountryintheworldtohaveallindustrialsectorsaccordingtotheUnitedNationsindustryclassificationsystem.Industrialvalue-addedinChinareached40.2trillionyuanin2022,accountingfor33.2%ofGDP.Thiscomprisesamanufacturingvalue-addedof33.5trillionyuan,whichaccountsfor27.7%ofitsGDP.Chinahasbeentheworld’slargestmanufacturingnationforthepast13years.In2022,Chinaaccountedfornearly30%ofworldtotalmanufacturingvalue-added,whiletheUSaccountedforonly16%.UponitsentryintotheWTOin2001,Chinaaccountedforonly6%ofglobalmanufacturingvalue-added,placingitfarbehindtheUS,whichrankedfirstglobally.

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AsshowninFigure2,acomparisonofindustrialvalue-addedgrowthratesforChinaandtheUSafterChina’s1978reformandopening-uprevealsastrongcorrelationbetweenthetwo,instarkcontrasttotheirmutualindependenceofindustrialdevelopmentbefore1978.Ontheonehand,ChinaandtheUScomplementoneanotherintheinternationaldivisionofmanufacturinglabor.TheUSismorecompetitiveinhigh-endmanufacturing,whereasChinahascomparativeadvantagesinlow-endmanufacturing.Cooperationbetweenthetwonationsalongtheglobalmanufacturingvaluechainwillaffectthegrowthrateofmanufacturingvalue-addedineachnation.Ontheglobalcommoditiesmarket,however,ChinaandtheUSareinterdependent.TheUSisChina’slargestexportmarket,andChinaisamanufacturinghubfortheUS.Themanufacturingvalue-addedgrowthrateofeachnationwillbeaffectedbythelevelofeconomicdevelopmentintheothernation.Made-in-ChinaproductsaresoprevalentintheUSthattheabsenceofChinawouldcomeatagreatexpenseofAmericanconsumersintermsofconvenienceandcost(Bongiorni,2007).

ThequestionisthatwhatmadeitpossibleforChinatoachieveitseconomicmiraclebasedonthe“worsttheory”asdescribedbyWesternmainstreameconomics.HowdidChinamaintainsuch

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arapidgrowthrate?Isitbecauseofwhatappearstobethe“worstpolicy”inWesterneyes?OrisitduetoChina’slate-moveradvantageandincomedisparitieswithhigh-incomenations(Lin,2019)?Technologyinnovation,arelativelyrarelocalsourceofproduction,turnsouttobetheprimarydriverofeconomicgrowthinChina,alabor-intensiveeconomywithasufficientlow-costadvantage.China’srapiddevelopmentisaresultofapracticalandinnovation-drivenapproach,asshownbythecountry’sexperiencewithreformandopening-up.Thetransitionfromfactor-andinvestment-driventoinnovation-drivengrowthhasbeenthedrivingforcebehindChina’sescapefromthe“middle-incometrap”(WuandWu,2018).

In2022,China’sR&Dexpendituresreached3.1trillionyuan,secondonlytothoseoftheUS,a10.4%increaseoverthepreviousyear.China’sR&DspendingasashareofGDPincreasedfrom1.45%in1978to2.55%in2022,withdouble-digitgrowthratesforsevenconsecutiveyears,andspendingonbasicresearchreached200billionyuan.SpendingonbasicresearchasashareofGDPhasexceeded6%forfourconsecutiveyearssince2019.ChinahasoneofthehighestR&Dspendinggrowthratesintheworld,despitetheinternationallymodestproportionofR&DspendingtoGDP.AccordingtotheStatisticalCommuniqueofthePeople'sRepublicofChinaonthe2022NationalEconomicandSocialDevelopment,in2022,Chinaapproved4.323millionpatentsandaccepted74,000patentapplicationsunderthePCTwith17.879millionvalidpatents,including3.28millionvaliddomesticinventionpatents.Chinahasledtheworldinthenumberofpatentssince2011,establishingitselfasanintellectualpropertyrights(IPR)powerhouse.

1.2GrowingBusinessChampions

Arobusteconomyissupportedbyrobustcorporations.Fromonein1989,thenumberofChinesecompaniesontheFortuneGlobal500listincreasedto129in2019,surpassingthe121oftheUS.Historically,JapancameclosesttotheUS,with149companiesonthelist,comparedto151oftheUSin1995.Sincethen,theUShasheldtheNo.1positionformanyyears,whileJapanhasslippedoverthelasttwodecades.In2022,therewere145Chinesecompanies(including28privatecompanies,or1/5ofthetotal)onthislist,surpassingthe124companiesoftheUSand47companiesofJapan.TheseChinesecompaniesrepresented31%ofthetotalbusinessrevenuesoftheGlobal500,surpassingtheUSforthefirsttime.ThischangereflectsthedeclineofWesterncentrismandushersinanewerainwhichChinesecompaniescompetewithmultinationalWesternfirmsonthesamestage.

GrowthofChinesecompanieshasbeenaccompaniedbyasharpimprovementintheirinnovationperformance.Chinesetechnologycompaniesamongtop50ontheBostonConsultingGroup’s(BCG)

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annuallistoftheworld’smostinnovativecompaniesfor2022include:Huawei(8th),Alibaba(22nd),Lenovo(24th),JD.com(30th),Xiaomi(31st),andTencent(41st).NineteenChinesecompaniesjoinedtherankoftop100globalcompanieswiththehighestR&Dspendingin2022asshowninthe2022EUIndustrialR&DInvestmentScoreboard.WithanR&Dinvestmentequivalentto19.5billioneuros,HuaweirankedfirstamongChinesecompaniesandfourthglobally.OtherChinesecompaniesonthelistincludeAlibaba(17th),Tencent(18th),ChinaStateConstructionEngineeringCorporation(34th),TaiwanSemiconductorManufacturingCompany(48th),Baidu(53rd),ChinaRailwayCorporation(54th),HonHai(55th),ChinaCommunicationsConstruction(56th),MediaTekInc.(59th),SAICMotor(61st),ChinaRailwayConstructionCorporation(62nd),ZTE(70th),Meituan(82nd),PowerConstructionCorporationofChina(85th),MetallurgicalCorporationofChina(91st),PetroChina(92th),KuaishouTechnology(94th),andNetEase(98th).

Withoutaworld-classmarket,therewouldhavebeennoworld-classcorporations.Chinahasembracednewtechnologiesandtheneweconomyintheemergingdigitaleconomyinordertocapturethestrategicwindowofopportunitiespresentedbyanewroundoftechnologicalandindustrialrevolutions(Wuetal.,2019).Accordingtothe51stStatisticalReportonChina,sInternetDevelopmentStatus,Chinahas1.067billioninternetusers,or21.56%ofworldtotal,makingitthelargestinternet-basedsocietyintheworld.Therearecurrently911millionpaidinternetusersand845milliononlineconsumers.ThevolumeofonlineretailtransactionsinChinais13.79trillionyuan,comparedto1.09trilliondollarsintheUS.China’sonlineretailsalesvolumeaccountsfor37%ofworldtotal,constituting31.34%ofitstotalconsumerproductsretailsalesvolumeof44trillionyuan.Chinahasconstructedtheworld’slargestandmostadvancedmobilecommunicationsnetwork,with1.683billionmobilephoneusers,ofwhom561million(33.3%)are5Gmobilephoneusers.Thisratioisoneofthehighestworldwide.ThevalueofChina’smobilepaymentmarketis5.5trillionUSdollars,whilethesamefigurefortheUSisonly110billionUSdollars.Thereare159publiclylistedinternetcompaniesinChinawithacombinedmarketcapitalizationof10.3trillionyuan.China’sdigitaleconomyisworth50trillionyuan,orover40%ofitsGDP.Intermsoftotalcomputingcapacity,China’soperationaldatacenterscontainover6.5millionstandardracks,rankingthemsecondintheworld.Ofcriticalprocessesatkeyindustrialenterprises,58.6%aredigitallycontrolled,andthepenetrationofdigitalR&Dtoolshasreached77%.

Chinahasbecometheworld’ssecond-largestdigitaleconomyoverthepastfourdecadesofreformandopening-upbyintegratingglobaltechnologicalinnovationsandfocusingondigitaltechnologyapplicationsandusecaseinnovationsdespitebeingalatemover.Chinahasfosteredalargenumberofworld-classdigitaleconomycompanies,includingHuawei,Alibaba,Tencent,andBaidu,inavarietyoffields.Byabsorbingthelargestuserbaseintheworld,Chinahascreatedathrivingdigitalinnovationecosystemthatintegratesthedigitaleconomywiththerealeconomy,givingrisetonewindustrialandbusinessmodelssuchassmartmanufacturing,industrialinternet,connectedvehicles,andtheplatformeconomy.Numerousecosystemsandbusinessmodelshavesupportedinnovationsintechnology.

1.3InnovativeEntrepreneurs

China’seconomicsuccessismoreattributabletocorporateinnovationandtheunderlyingethosofentrepreneurship.Duringthepastfourdecadesofreformandopening-up,alargenumberofexploratoryandinnovativeentrepreneurshavearisenandplayedacrucialroleinChina’seconomicdevelopment,makingsignificantcontributionstoChina’seconomictransitionandinnovation-drivendevelopment.Chinahastakenstepstoestablishenterprisesasthefoundationofinnovation,withinnovativeentrepreneursatthehelm.Enterpriseshavestartedtoplayapivotalroleinmarketcompetitionandtheintegrationofinnovationandindustrialchains.Entrepreneursspearheadthemarket-basedsupplyoftechnologyandinnovatetostaycompetitive.Moreover,theycloselyfollowandswiftlyrespondtomarketchangesinordertoprovidemoreinnovativeproductsandservices.

Despiterelativedisadvantagesintechnology,humanresources,andcapitalcomparedto

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multinationalcorporationsfromdevelopednations,Chineseenterpriseshavegainedgreatermarketrecognitionandcompetitiveadvantageduetotheirentrepreneurialspiritandrelentlessconsolidationofinternalandexternalresources,whichresultedinthecreationofinnovativeproductsandserviceswithsuperiorquality,efficiency,andcost-effectiveness.Duringthisphaseofindustrialdevelopment,theyimportedcompletesetsofmaturetechnologyandacceleratedthecommercializationandlocalizationofimportedtechnologies.Inthisway,Chineseentrepreneurssuppliedthelocalmarketwithsuitabletechnologies,createdjobs,establishedafootholdontheinternationalmarket,andacceleratedChina’semergenceastheworld’sfactoryfloor.Inthenewwaveofindustrialdevelopment,theyexplorednewtechnologiesandglobalmarketswithaudacity,racedtocatchuptoindustryleadersandincreaseinnovationdynamism,andgraspedthestrategicopportunitiespresentedbyaparadigmshift.Asaresult,theyhaveshapednewtechnologicalparadigms,fosteredindependentinnovationcapabilities,attainedcross-cyclicaldevelopment,andattractedandnurturedalargenumberofinnovativetalents.Withanentrepreneurialspirit,enterpriseshaveconsistentlypropelledtechnologyadvancement,industryupgrade,andindustrialdevelopmenttowardhigh-endmanufacturingandhighvalue-added,therebycontributingtoeconomicgrowth,socialprogress,andinternationalcompetitiveness.

1.4Cross-CyclicalIndustrialGrowthModel

Insometechnologyindustries,Chinahasdemonstratedadiscretegrowthprocess,whichisessentiallyalong-termgrowthmodelcharacterizedbystepchangesintechnologyparadigmanddeep-seatedstructuraltransition.Takingthedisplayindustryforinstance,ChinahasevolvedfromalaggardinCRTtoafollowerinLCDpanelsandaleaderinOLEDpanels.ThroughconsistentR&Dinput,BOEGroup,forinstance,hastakenfulladvantageofthewindowofstrategicopportunitiesfromatechnologyparadigmshift,makingasuccessstoryofcross-cyclicalgrowth.WhenBOEGroupwasestablishedin1993,theglobalLCDpaneltechnologywasstillinitsnascency.Backthen,advancedeconomieslikeJapanandSouthKoreaheldanabsoluteadvantageinLCD.BOE,agloballeaderinthesemiconductordisplaysmarket,hasplayedapivotalroleintheestablishmentanddevelopmentofChina'sdisplayindustry.Currently,oneinfoursmartdevicesintheworldisequippedwithaBOEscreen.AccordingtoOmdia,atechnologyresearchfirm,BOEranksfirstintheworldintermsofLCDshipmentsforthefiveapplicationsectorsofsmartphones,tablets,laptops,monitors,andtelevisions.By2022,BOEhadcumulativelysubmitted80,000patentapplications.IFICLAIMS,aUS-basedpatentservicescompany,rankedBOEeleventhworldwideinitsstatisticalreportofUSpatentauthorizationsin2022,makingitatop20globalpatentapplicantforthefifthconsecutiveyear.With1,884PCTpatentapplications,BOEisranked7thworldwideinthe2022WorldIntellectualPropertyOrganization(WIPO)rankingofglobalpatentapplicants.ThismakesBOEoneofthetop10globalPCTpatentapplicantsfortheseventhyearinarow.Moreover,ithasmadekeybreakthroughsinflexibledisplayandothernewemergingtechnologicalfields,contributingtoChina’semergenceasahigh-endmanufacturingpowerhouse.

Chinahasalsoexperiencedcross-cyclicaldevelopmentintheICTindustry,whichisledbyHuawei.PriortothefoundingofHuaweiin1987,theChineseICTmarketwasdominatedbymultinationalcorporationsfrom“sevencountrieswitheightstandards”.Namely,therewereeightmodelsofequipmentfromsevencountries,includingNECandFujitsufromJapan,LucentfromtheUS,NortelfromCanada,EricssonfromSweden,SiemensfromGermany,BTMfromBelgium,andAlcatelfromFrance.Amongthem,Japan'sNECandFujitsuaccountedfortwostandards.Huawei’shistoryofcatchingupintheICTdomaincanbecharacterizedasaprocessofconstantinnovationandbreakthroughundervarioustechnologyparadigms,transformingfroma2Glaggardtoa3Gfollower,a4Gforerunner,anda5Gpacesetter(Wuetal.,2020).ThroughconstanttechnologicaladvancesandR&Dinvestments,HuaweihascaughtupwithandinsomeinstancesevensurpassedCiscoandEricssonastheworld’sleadingtelecomgearmaker.Huawei’sconstantinnovationsandadvancementsinareassuchasartificial

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intelligence(AI),cloudcomputing,andtheinternetofthings(IoT)havecontributedtoChina’sriseintheglobalhigh-techindustry.Huaweihasadoptedaninnovationstrategythatisopen,collaborative,andwin-win.Today,HuaweiisaprominentglobalproviderofICTinfrastructureandsmartdevices,with207,000employeesandbusinessoperationsinmorethan170countriesandregionsservingsomethreebillionpeople.In2022,Huaweiearned642.3billionyuaninglobalbusinesssalesandinvested161.5billionyuaninR&D,accountingfor25.1%oftotalannualincome.Overadecade,Huaweihasspentmorethan977.3billionyuanonresearchanddevelopment.Huaweiemploys114,000R&Dpersonnels,whichaccountsfor55.4%ofitstotalworkforce,andpossessesover120,000patentauthorizationsworldwide.Ithassubmittedover68,000standardproposalstomorethan200standardorganizations,collaboratingwithdomesticandinternationalcustomersandindustrialpartnerstoadvanceglobaltechnologicalprogressandindustrialmodernization.InstallationsofHuawei’sEulerOShavesurpassed3millionunits.HarmonyOS,developedbyHuawei,hasbeeninstalledonover330milliondevices.HarmonyOShasover2milliondevelopersandover2300partnersinitssmartdeviceecosystem.

2.EvolutionofInnovation-DrivenDevelopment:TechnologicalCatch-UpandSecondaryInnovation

2.1TechnologicalCatch-UpintheChineseContext

Intermsofindigenousinnovationandtechnologicalcatch-up,Chinesecompaniesexhibitdistinctivecharacteristics.Thefirstoneiscontext-specificity:ChineseenterprisescatchupwithindustryleadersintheChinesecontext,whichisdistinctfromthecontextforadvancedeconomiesandemergingindustrializednations.Thesecondoneisanewdevelopmentenvironment:Chineseenterpriseshaveembracedaglobalandnetwork-basedopenenvironment,redefiningtheconceptofindigenousinnovation.Targetingemergingtechnologies,Chinese-styletechnologicalcatch-upoccurredinmultiplephasesacrossadiverserangeofsectorsatvariouslevels.IntheWesterncontext,itwasoriginalinnovationsthatbroughtWesterncompaniestotheglobalfrontiers.InthecontextofemergingindustrializednationssuchasJapanandSouthKorea,however,theirbusinesseshavecompletedtechnologicalcatch-upfromimitationtoinnovation(Hobday,1985;Kim,1997;LeeandLim,2001).Duringtheirinitialstagesofdevelopment,Westernmultinationalsbenefitedfromastablepoliticalenvironment,completetechnologysystems,andflourishingmarketeconomiesintheabsenceofaglobalnetwork.EmergingindustrializednationslikeJapanandSouthKoreahadtheirgovernmentstaketheleadincatchingupintechnology;nationaltechnologysystemsdictatedcorporateresearchanddevelopment;andexportsweregearedprimarilytowardtheEuropeanandNorthAmericanmarkets.

UnlikeWesterndevelopedcountriesandlatecomerssuchasJapanandSouthKorea,Chineseenterpriseshavepursuedindigenousinnovationandtechnologicalcatch-upintheChinesecontextoftransitionalownershipsystem,diversifiedtechnologicalsystems,multitieredmarketspace,andemergingglobalnetworks.ThesedistinguishingcharacteristicshavedefinedChina’shomegrowncreativityandtechnologicalcatch-up(WuandWu,2013).First,globalnetworksprimarilyincludeforeigndirectinvestment(FDI),exportspillovers,globalvaluechains,manufacturingnetworks,andoutwardforeigndirectinvestment(OFDI)duringWesterncrises.Second,thecontextoftechnologicalopportunitiesincludesarapidshiftintechnologicalparadigmandtheemergenceofdisruptivetechnologies.Third,domesticmarketopportunitiesarisefromChina’smultitiereddomesticmarketbasedonitslow-costadvantage,complexmarketstructures,andlargedomesticdemand.TheextensivetechnologyandbusinessmodelinnovationsinChina’sbusinesscommunityserveasaprimeexampleofthecountry’swayoftechnologicalcatch-up.Unlikeprevioustechnology-focusedcatch-upefforts,China’scomprehensivecatch-upstrategyshouldincorporatesystem,technology,market,andnetwork.Incertaininstances,breakthroughshavebeenmadefirstinmarkets,institutions,andperipheraltechnologies.

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Chinaregrettablyfellbehindinnumerousindustrialrevolutionsduetohistoricalcircumstances.China’stechnologicalcatch-uprequiresextensiveindigenousinnovationstocompensateforitsmissedopportunitiesduringthethreeindustrialrevolutionsthatusheredintheerasofsteamengines,electricpower,andinformationtechnology.TheFourthIndustrialRevolution,ledbytheABCDE(artificialintelligence,blockchain,cloudcomputing,datatech,andedgecomputing),providesChinawithstrategicopportunitiesforaparadigmshift.ItisbothnecessaryandpossibleforChinatoseizethiswindowofopportunitiesbasedonitsknowledgeandexperiencefromdecadesofindigenousinnovation.Relentlessresearch,developmentandinnovationaretheonlywayforChinatobypassexistingtechnologyparadigmsestablishedbyWesternpowers,bolsteritsmanufacturingstrength,andachievetechnologicalindependenceandsustainabledevelopment.

2.2DynamicProcessofSecondaryInnovation

Westernnationsfocusedmoreonoriginalinnovationstemmingfrombasicresearch,tryingtocreateordisruptanentireindustrywithoneinventionornewproductChinahasembarkedonapathof“secondaryinnovation”,i.e.,creativedevelopmentonthebasisoftechnologyacquisitionandassimilation.

Basedontheconceptsof“technologyparadigm”and“technologytrack”proposedbyDosi(1982),Wu(1995)defined“secondaryinnovation”as“technologyinnovationbasedontechnologyimportationwithinanexistingtechnologyparadigmandalonganexistingtechnologytrack”.BasedonthetechnologylifecyclemodeldevelopedbyUtterbackandAbernathy(1975),Wu(1995)devisedadynamicprocessmodelofsecondaryinnovation,asdepictedinFigure3.Thedynamicprocessofsecondaryinnovationsuggeststhatintheearlyphasesofdevelopment,late-moverbusinessesshouldintroduceTypeItechnologies(maturetechnologies)andenhancetechnologicalcapabilitiesthroughthethreestagesofsecondaryinnovation.Afterenterpriseshaveaccumulatedsufficientknowledgeandexperiencethroughmultipleroundsofsecondaryinnovation,theymaybegintointroduceTypeIItechnologies(emergingtechnologiesorlaboratorytechnologies)byseizingthewindowofstrategicopportunitiesfromaparadigmshift(i.e.BeyondCatch-upI)oreveninitiateanewroundofinnovation(i.e.BeyondCatch-upII).Inthissense,BeyondCatch-upmeansbypassinganexistingtechnologyparadigm,asopposedtotheconventionalcatch-upalongatechnologicaltrack.BeyondCatch-upoccursinthecontextofaparadigmaticshiftintechnology,inwhichthenewtechnologyisstillintheearlystagesoflifecycle.Thiscreatesconditionsforindustrylate-comerstocatchuptoindustryleadersintermsoftechnologicalcapabilities.

“Secondaryinnovation”isadynamicprocessofaccumulationandevolution.Onthebasisoftheimportationofmaturetechnologies,“secondaryinnovation”canbeapproximatelycategorizedintothreestages:StageI:Imitativeinnovation,orthemasteryofanewtechnologythatisnotpresentlyavailableonthelocalmarketthroughimportation,imitation,learningbydoing,orreverseengineeringinordertomanufacturethesameproduct.Afterthepreviousstageofplanning,accumulationandassimilation,StageIIiscreativeimitation,whichinvolvesindigenousinnovationandlocalmanufacturingforimportsubstitution.StageIIIisimprovementinnovation:Thetechnologyimportermasterstheprinciplesanduseofthenewtech