Twin innovation systems, intermediate technology and economic development: History and prospect for China

SummaryThis paper argues that less developed countries (LDCs) need twin national systems of innovation: systems with one, ‘upper’ level or sub-system to engage with advanced technology and develop industries which use it; and (cooperating with the upper level) a ‘lower’ level to help to improve the economy’s existing, traditional technology. The focus is on the lower level. The process there should involve the development and use of intermediate technologies. These are much better suited to the LDC’s factor endowment, and maximise opportunities for learning by doing. Most LDCs lack such a lower level, and lose much from this; Brazil is an example. Japan and Taiwan developed twin NSIs and gained accordingly, until success caused the levels to merge. 19th Century Denmark and Malaysia are other cases in point recently. Mainland China failed to build on its 1950s beginnings and the lower level of its NSI is now weak.