Events

A prominent IR literature holds that China will be unable to innovate because of its authoritarian institutions. This suggests that China will be unable to evade the “middle income trap” or catch up to the United States economically or militarily. This view is grounded theoretically in an economics literature that emphasizes the importance of “inclusive” institutions in promoting economic growth and innovation. Such institutions are usually associated with democracy, suggesting a “democratic advantage” at innovation. Yet this view is increasingly refuted by evidence that China has been rising in the global innovation ranks. What explains China’s growing innovation? I explain this puzzle with two arguments. First, arguments about a “democratic advantage” in innovation neglect the tremendous heterogeneity of authoritarian regimes. While some authoritarian regimes stifle growth and innovation through corruption and other extractive policies, others provide public goods, invest in education, and pursue other policies that encourage economic growth and innovation.  Second, IR scholars tend to define innovation narrowly: emphasizing new product and science-based innovation, while not taking into account other variants that also drive productivity and growth. The case of China shows that 1) the Chinese government is pursuing inclusive policies today that encourage innovation. Furthermore, 2) China performs the strongest in the types of innovation (consumer-focused and efficiency-driven) that scholars neglect. China’s innovation success has profound implications for the global balance of power (suggesting a likely bipolar distribution of power in the future) as well as for the future of international order.