Op-Ed Contributors
Innovation leads to prosperity
By Zhou Muzi (China Daily)
Updated: 2010-02-26 07:47
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After the Cold War, the history of the world entered a new era: Innovations in information technology and globalization have become two major forces propelling the global economy. Enterprises had ample opportunities to expand their business across borders, and their business models shifted from meeting market demand to creating new demand avenues. Reform, openness and innovations have since become three essential factors in creating prosperity in cities and nations. But to meet the challenges of the new era, we must replace the rules of the old game.
Two successful examples can be cited here to best illustrate that point. With its policy of reform and opening-up, China made a historic decision by abandoning its planned economy, and save it from severe difficulties and chaos. The United States established a brand new IT base in the West, which has for the past 20 years been an important driving force for its economy. In contrast, Japan, lost in memories of its past economic miracles, has failed to adopt new strategies for both the nation and its enterprises.
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Look at China. Most of the giant enterprises that are pillars of the national economy today were small or even non-existent just 20 years ago. But the birth and growth of this younger generation of enterprises and entrepreneurs has propelled the development of the entire nation.
In the Silicon Valley, a high-tech hub on the US' West Coast that has driven innovations and advanced US technology forward, engineers have developed emerging enterprises and exploited new lifestyles, new market demands and new industries. The region has taken the leading role in the Information Revolution.
However, for the past 20 years no new enterprises have cropped up in Japan. Old enterprises are still dominant both in personnel and material resources of the IT industry. Without doubt, Japan is a nation that heavily depends on scientific research: Repeated nominations for and attainments of the Nobel Prize proves that its achievements in science research have been recognized by the world. That makes it hard to explain the economic recession and the nation's decline in recent years.
In fact, this should be attributed to the lack of entrepreneurial spirit among the younger generation, which is accustomed to living on wages. Too many advanced technologies have been forgotten instead of being granted the opportunity of implementation.
Openness is another essential factor in prosperity. Only those who offer ample opportunities for talent all over the world can gain in profit.
The Silicon Valley can be cited as a perfect example. The efforts of dream seekers from all parts of the world have built this region into a wonder in the wild. Thanks to US universities and more than 670,000 international students, talent and ideas have never been in short supply here.
China has also benefited much from its opening-up policy. It has provided numerous opportunities to enterprises on a global scale.
In seeking economic prosperity, the government has been responsible in establishing an environment favorable to starting businesses. Opening domestic markets, controlling monopolies, providing funds and support for science researches have all required the government to take action.
However, direct interference and protection of the industries should be carefully avoided. History tells us that many industries protected by the government have underachieved.
For example, the US automobile industry, which used to yield great political influence, had relied too much upon political authority. This is partly why the industry neglected innovations and collapsed under numerous bankruptcies.
The Japanese radio industry was also defeated by similar protections. But the Japanese cartoon industry has become a cultural pillar of the country without receiving any special support from the government.
In this new age, creations and innovations come from communication and interactions among different people. The cities should offer such a platform for them to transform ideas into actions, and also create opportunities for emerging enterprises and entrepreneurs. Only an open, convenient and tolerant city can fully realize that and be attractive enough to accumulate global talents.
And that's the essence of prosperity in this new era of changes and innovations: Finding its opportunities and taking hold of them.
The author is a professor at the Tokyo Keizai University.
(China Daily 02/26/2010 page8)
