Director, Poverty Reduction Economic Management,
Financial Sector and Private Sector Development
Chief Economist, East Asia and Pacific Region
The World Bank
May 14, 2009 Beijing, China
Vice Secretary General Mr. ZHENG, Distinguished guests, ladies and gentlemen,
It gives me enormous pleasure to welcome all of you to this International Seminar on Promoting Innovation for Development. I would like to thank the Ministry of Science and Technology of China for co-sponsoring this event with the World Bank and particularly appreciate its support and guidance to the World Bank team over the past two years.
This seminar takes place in an extraordinary time. High-income countries are in deep recession. OECD economies are likely to contract 3%.. GDP growth among developing countries will decline from 5.8% in 2008 to 2.1%. The implications for job losses and poverty increases in the developing world are worrying.
Despite some recent signs of stabilization and recovery, China is still battling with the impact of the global crisis. Its export sectors have been hit hard by sharply reduced external demand. While the government’s fiscal stimulus package has started to show effects, the road to a full recovery is filled with challenges.
In such an environment, business managers and government policy makers are all searching for ways to weather the storm. While it is still too early to predict the future path of this crisis, one thing is certain: it will be the most innovative firms and economies that have the best chance to emerge earlier and stronger out of this crisis. The fiscal stimulus provides an opportunity to shape the future structure of the Chinese economy, including support for innovative, knowledge-intensive industries and firms. In this sense, this seminar could not have been timelier.
Innovation, of course, is not a short term fix. Quite the contrary, it is a continuous long-term endeavor. This is so because in today’s highly globalized economy, innovation has become the key driver for growth and competitiveness in middle income and advanced economies. The capability to innovate will be increasingly a crucial determinant of the global competitiveness of nations over the coming decades.
By “capability to innovate” I refer to not only the capability of creating new technologies, but also of disseminating, adapting and adopting existing technologies. Indeed, the World Bank’s recent studies, which my colleagues will present later in this seminar, have found that developing economies stand to gain from sustained efforts in promoting technological adaptation, adoption, and dissemination.
In the past decades, China has made significant achievements in promoting technological innovation and productivity growth. Continuous efforts in importing, adopting and absorbing foreign technology have sustained the impressive performance of the Chinese economy. Since mid-1990s, China has dramatically scaled up its investment in R&D, with total R&D expenditure increased by 5.5 times in real terms during 1995-2006.
Although a late-comer compared with technologically advanced nations, China is closing the gap between it and the international technological frontier.
Maintaining this progress will require continuous reform in China’s innovation system, which will need to be enterprise-led and market-based. This is why the World Bank appreciates the opportunity to assist the Government of China in developing its strategy of “enterprise-led innovation” as laid out in the S&T Program in 2006. The report on Promoting Enterprise-Led Innovation in China that is being launched in this seminar represents part of our efforts along this direction.
As the report has emphasized, the realization of China’s vision to promote enterprise-led innovation will entail concerted actions by the government, the corporate sector, and the financial sector. It recommends the government pursue a balanced strategy, create the right incentives, build the capacity of the private sector, and strengthen the ecosystem for the venture capital industry. While it is an honor for the World Bank to be able to associate with China’s endeavor to accelerate innovation, we recognize that innovation is a complex matter and turning ideas and strategies into action is a formidable challenge.
This seminar is part of that process, and we have the privilege to welcome a well represented group of participants including government officials both at the central and local level, policy researchers, private sector and financial sector managers, and media representatives. We in the World Bank have a strong belief that in today’s fast changing world, sharing experience and knowledge has become increasingly important. Thanks to our co-sponsor and distinguished international and national speakers, we will have an opportunity to do just that. I wish you all a productive and successful event!
Thank you very much.