Innovation and progress in science and technology(S&T) top China's economic agenda. The central government's guiding policy document for the promotion of innovation is the Medium to Long Term Plan for the Development of the S&T Plan issued in 2006. This plan articulates the ambitious goal of China becoming and “innovation-oriented” society by the year 2020. In this context, regional innovation system (RIS) places the central and regional government front and center in directing innovation, the course of technological progress and sustainable economic development in China. One of the core aspects of economic growth is technological progress, which it is assumed is triggered by regional innovation system. Using 1999~2002 31 regional panel data, this paper explores the determinants of RIS in China. This paper also estimated the determinants of RIS efficiency, using pooled least squares method. The evaluation of RIS performance in China in terms of technical efficiency thus constitutes the main goal of this research. Most of the existing approaches in this area focus on the RIS performance the amount of regional resource available within an RIS is a crucial aspect. We found significantly positive relation between the R&D expenses, free marketziation and RIS performance. It is also found that a region with a higher level of human capital, state owned enterprise R&D activity and FDI is negatively associated with RIS performance. Beside the contribution to empirically knowledge, we found and important implication here. That is, FDI and TNC have not a significant impact on the RIS performance. Hence China’s S&T policy must be customized to support the RIS. That is regional innovation support policies have to be embedded in the territory. Then, this policy is expected to an interactive process enabling regions to develop from being passive innovation producers to becoming new learning and social system.

Innovation and progress in science and technology(S&T) top China's economic agenda. The central government's guiding policy document for the promotion of innovation is the Medium to Long Term Plan for the Development of the S&T Plan issued in 2006. This plan articulates the ambitious goal of China becoming and “innovation-oriented” society by the year 2020. In this context, regional innovation system (RIS) places the central and regional government front and center in directing innovation, the course of technological progress and sustainable economic development in China. One of the core aspects of economic growth is technological progress, which it is assumed is triggered by regional innovation system. Using 1999~2002 31 regional panel data, this paper explores the determinants of RIS in China. This paper also estimated the determinants of RIS efficiency, using pooled least squares method. The evaluation of RIS performance in China in terms of technical efficiency thus constitutes the main goal of this research. Most of the existing approaches in this area focus on the RIS performance the amount of regional resource available within an RIS is a crucial aspect. We found significantly positive relation between the R&D expenses, free marketziation and RIS performance. It is also found that a region with a higher level of human capital, state owned enterprise R&D activity and FDI is negatively associated with RIS performance. Beside the contribution to empirically knowledge, we found and important implication here. That is, FDI and TNC have not a significant impact on the RIS performance. Hence China’s S&T policy must be customized to support the RIS. That is regional innovation support policies have to be embedded in the territory. Then, this policy is expected to an interactive process enabling regions to develop from being passive innovation producers to becoming new learning and social system.

Regional Innovation System, Marketziation, R&D, FDI, China’s Technology Upgrading Growth Strategy