Establishing an Open and Sustainable Belt and Road Innovation System

Cooperation in innovation among China and Belt and Road Initiative (BRI) countries has not been a focus of the BRI so far due to an insufficient foundation in and relatively low demand for technological innovation in these countries. However, the fracture in the G-2 (US and China) innovation model has exposed the issue of a lack of endogenous growth momentum in the developing world, highlighting the necessity and importance of cooperation in innovation among China and BRI countries (i.e., G-N innovation model). Such cooperation will bring three major benefits to China and BRI countries, in our opinion. First, it could consolidate resources for innovation, and create innovation cycles. Second, it could enhance the intensity, cohesiveness, and sustainability of cooperation in innovation. Third, effective cooperation in innovation among China and BRI countries could pave the way for China to cooperate with advanced economies like Europe and the US, countering deglobalization and enhancing the openness of the global innovation environment. The transnational innovation system (TNIS), a system wherein entities that focus on technological innovation (including governments, corporations, research institutions, and intermediaries) collaborate in conducting cross-border innovation, is indispensable to cooperation in innovation among China and BRI countries. A TNIS may be classified into four categories based on ways of knowledge creation and types of market demand. Restricted by their individual conditions and the external environment, BRI countries require strategies and tactics that will empower them to work toward set priorities when building the TNIS. According to Binz & Truffer (2017), TNIS can be further divided into four categories based on the technological innovation dimension and the market demand dimension. “Footloose TNIS” refers to innovations that are science and technology driven (STI) and cater to standard market demand (i.e., market demand is homogeneous and there is no need to adapt to specific markets); “market-anchored TNIS” suggests that innovations rely on STI mode, but target customized market demand, meaning the innovations should be rooted in circumstances in a specific region or country; “spatially-sticky TNIS” refers to innovations that are entirely opposite to those in “footloose TNIS”, i.e., the innovations are categorized as learning-by-doing, using, and interacting (DUI), and they cater to customized market demand; “production-anchored TNIS” also focuses on innovations that are DUI-driven, but follow standard market demand. The four TNIS require different types of system to facilitate innovation, and we think it is of strategic importance that BRI countries initially prioritize footloose TNIS and spatially-sticky TNIS before embarking on production-anchored and market-anchored TNIS. This should help connect the BRI innovation system with the global innovation system, and prevent the formation of an isolated island in the field of technological innovation. For footloose TNIS, we believe that governments of BRI countries could play a more important role in increasing investment in innovation. The intensity and diversity of stimulus policies on transnational scientific research should be enhanced, and innovation centers can be built to capitalize on the agglomeration effect, thus improving productivity, efficiency, and knowledge pooling. In addition, we think that institutional coordination among China and BRI countries can be strengthened to reduce friction in technological cooperation. While Western countries have long focused on frontier technologies, we believe that China and BRI countries should establish innovation cycles of R&D and commercialization for sub-frontier technologies. For spatially-sticky TNIS, we believe that the innovation supply and demand in niche markets should be better matched. In our opinion, transnational intermediary businesses such as consulting, venture capital, and private equity can be encouraged to facilitate the consolidation of BRI markets, while production- and market-anchored TNIS may serve as a bridge between BRI innovation and global innovation. As the BRI innovation system improves, we believe that open and inclusive cooperation can help attract innovation entities from Europe and the US, boosting the inclusiveness of the global market.