China shows that competition leads to innovation, something the West seems to have forgotten
Edmund S. Phelps says China, like Western countries before, has realised that ‘zeal’ isn’t enough – society benefits most when competition is encouraged
From the early 19th century to the early 20th century, Western countries attributed their economic growth to the discoveries of “scientists and navigators”. A country needed only the “zeal” to develop “obvious” commercial applications, and build the facilities to meet demand for new products.
For its part, China’s government is evidently supportive of Chinese businesses developing a capacity to produce indigenous innovations. It no doubt recognises that such innovations are all the more valuable when innovation remains weak in the West, where growth in total factor productivity has continued its long slowdown.