Introduction

Innovation, as an economic concept, can be defined in two ways. In the narrow sense, innovation refers to a series of actions ranging from the conception of a new product to its designing, testing, manufacturing and marketing. In the broad sense, innovation refers to a network in which different participants and bodies such as business enterprise, the government, universities and research institutes interact or co-operate with each other in an environment that fosters new ideas or product innovations. It is only through innovation that new products are offered to society or new technologies are put into use. At the core of the process of innovation is the application of technology (陈宏愚 and 白希贤 / Chen Hongyu and Bai Xixian, 2001).

In China, the national science and technology innovation system (STIS) is a network comprising government authorities, business enterprises, research institutes, universities and other supporting bodies, whose role and actions largely determine the extent and scope of innovations in science and technology and directly influence the competitiveness of the country (冯之浚 / Feng Zhijun, 1999). At the regional level, STIS will depend upon the actions of the various local parties that make up the innovation system.

In the age of the knowledge economy, the US, thanks to its superiority in science and technology, leads other countries in innovations. The US National Competitiveness Commission claims that US led in 24 out of 27 key areas of technology. Reports issued by the World Economic Forum also confirm that the US is ahead of Japan in competitiveness. In order to meet the challenges of the knowledge economy, Japan has adopted a policy of science and technology innovation and South Korea too has begun to place increasing emphasis on technology innovations (陈立 / Chen Li, 2002).

China is making efforts to catch up with this trend and has lost no time to embark on its own STIS. Since then, many effective and specific measures have been taken to promote the spread of innovations. Noticeable effects have been obtained to ensure sound and rapid growth of the Chinese economy (陈立 / Chen Li, 2002).

Since China's entry into WTO in 2001, access to its market has been liberalized and its economic and social reforms have been intensified to meet WTO obligations. As the Chinese economy continues to record steady growth, Hubei province in central China has taken painstaking efforts to keep pace with national reform and opening-up in the past several years. Despite some impressive successes, there are obvious problems still to be resolved. These problems include the limited extent of reform and opening-up in the province and the failure to capitalize on its resources and location, the lackluster performance of its science and technology research, and a weak economic structure in which industrial production is lagging and enterprises remain small in size and of limited economic capability. In short, Hubei does not offer distinct attractions to investors, but faces competitive pressure from both of China's eastern and western regions instead.

Establishing a regional system to promote science and technology innovations is recognized as the path towards economic progress in Hubei. The purpose of the system would be to improve the industrial structure of the province by upgrading traditional as well as promoting "high-tech" industries as the backbone of the production system. The economy will be driven by innovations to sharpen the competitive edge of Hubei and to enable it to play a rightful role in the national economy in the context of economic globalization.

Types of Regional Science and Technology Innovation Systems

Depending on the role played by different elements in science and technology innovations, different types of systems are seen. The first type emphasizes the role of "innovation parties", namely, business enterprises, the universities, research institutes and others, to form a network within a given region. Shanghai, the centre of the Yangtze Delta, has effectively and efficiently utilized the important roles of these innovation parties and has built up a manufacturing base driven by the use of technologies. The second type places emphasis on various "innovation resources and ingredients" such as science and technology, talents, funds, policy environment, innovation atmosphere and other considerations within the region. Shenzhen shows that, by effectively and efficiently utilizing the important roles of "innovation resources and ingredients", it may become more sensitive to the requirements of the market and is quick to adopt suitable innovations. Yet another type relies on the system of science and technology itself. Beijing, as the central node in the national technology innovation network, can make use of the technologies from all over the country and be fully supported by its own regional STIS (郑加强 / Zheng Jiaqiang, 2002).

In this paper, the focus of attention will be placed on the regional STIS. By definition, a regional STIS possesses several distinctive features. Firstly, the region may be administrative or economic-geographic. This paper opts for the geographic definition because it indicates the openness of the regional system based on science and technology innovations and is analogous to the existing regional systems in China such as the Southeast China Economic Region, Yangtze Delta Economic Region and Bohai Economic Region. Next, the role of the "innovation parties" is highlighted. Only with the active participation of non-governmental parties to promote market-driven innovations will the regional STIS become vigorous. Thirdly, in a regional innovation system, the resources to be optimized and mobilized will be acquired from both within and outside the region. This has been especially important to those regions where "innovation resources" such as information and talents were scarce as in the case of Shenzhen or Suzhou. With the growth of modern information technology and communication, innovation resources are increasingly flowing across regions. The emergence of new organizations such as "virtual strategic leagues" would particularly expedite such cross-regional flows. Lastly, a regional STIS is first and foremost an independent system as well as a subsystem of the national innovation system. However, existence of a combination of regional systems does not constitute an effective national system. This would call for certain special objectives and inner mechanisms (傅家骥 / Fu Jiaji etal., 2003).

Hubei Science and Technology Innovation System: Some Characteristics

The major characteristics of the Hubei STIS are hierarchical structure, multi-dimensionality, and industry-specificity.

Hierarchical Structure

The Hubei STIS structure is arranged in three levels. On the first is the subsystem of the national STIS which aims primarily to promote commercializing and marketing achievements of scientific and technological research findings. To serve the needs of Hubei's economic and social development, and based on the current industrial base and resources of the province, the mid- and long-term plans of science and

technology innovations will be balanced on this level.

The next level is that of STIS's in major cities such as Wuhan, Huangshi, Yichang, Jingzhou and Xiangfan. With ample funds, resources and information, major cities play an especially significant role as centres of innovations. The major cities of China account for one-half of the country's industrial production, 70 per cent of its GDP, 80 per cent of national revenue, 85 per cent of value-added production of tertiary industries, and 90 per cent of higher education and scientific research (陈宏愚 and 白希贤 / Chen Hongyu and Bai Xixian, 2001). The expansion and growth of industrial production, technological innovations and professional and managerial expertise in the major cities and their outward diffusion will have a tremendous impact on adjoining areas. The Shanghai economic region is a case in point. Similarly, the Wuhan economic region can also play a key role in accelerating development in surrounding areas.

At the apex of the hierarchy of the Wuhan economic region are the High Technology Development Zone. Economic Development Zone and University Science and Technology Garden located in the major cities. Both Wuhan and Xiangfan possess several provincial "high-tech" development zones. Playing a sterling role are the photo-electronic information industry based in Wuhan, dubbed China's Optics Valley, and China's Drug Valley in Gedian. It is at this level that the development zones should play a leading role in science and technology innovations in the province by means of regulating their functions and structures and fostering flexible mechanisms and policy environment. Science and technology innovations would be further facilitated if the construction of Wuhan University Town is accelerated, the resources of various universities in Hubei are pooled together, and if "virtual strategic leagues" are established to expedite collaboration on innovations across regions.

Multi-dimensionality

Historically and in view of its resources and nodal location, Hubei has always served as a transportation centre for the distribution of goods and commodities in central and western China. Hubei has superior infrastructure, human resources, technology and market availability. However, there are weaknesses in the relative absence of private enterprises and an export-oriented economy. There are other constraints that have an adverse influence on the emergence of a STIS in Hubei. There is an absence of a special mechanism to commercialize the findings of scientific research, and the institutional framework is too weak to provide the necessary incentives to encourage technological innovations.

There are three dimensions in the Hubei STIS. The first refers to the innovation parties comprising the government, business enterprises, universities, research institutes, financial institutions, the market and entrepreneurs. The government leads technology innovation; the universities and research institutes conduct research on new technologies; financial institutions support funding for research; the market creates the potential demand for these innovations; and the entrepreneurs adopt, commercialize and popularize the innovations. The development of a STIS would proceed on a sound footing in Hubei only when the combination of parties is present and an atmosphere of mutual support is fostered through which each party plays its vital and essential role in the complex process.

The second dimension refers to that of systems. According to the characteristics of the STIS, a system may exist as a subsystem within a larger set of systems. The Hubei STIS should be integrated as a subsystem of the national system at the apex of the hierarchy, the industry innovation system comprises a subsystem in the middle level, and individual enterprises make up the "grass root" level. The innovation system should organize and integrate the range of activities that would nurture a favourable atmosphere for the introduction and adoption of innovations. These activities would include the way of thinking, institutional organization, enabling mechanisms, management, services and the entire ambience that induces the introduction and the adoption of innovations. These innovation activities would then be linked together as an integrated system within the larger national system.

The third dimension refers to the innovation chain. At the regional level, the chain of STIS's is basically a closed system that is concerned with the conversion of technology into processes or products, and the application of these processes or marketing of the products and related procedures (Figure 16.1). The absence of any component part will lead to the breakdown of the innovation chain. Hence, all the parties involved in the innovation system are indispensable. The parties engaged in research and development are concerned not just vith science and technology innovation but are also involved in the efficient operation of various departments within the enterprise.

Industry-specificity

The Hubei economv is characterized by certain special features, namely, a number of well-known universities and institutes, strong manufacturing industries featuring automobiles, steel, textiles, "high-tech" industries of optics, biochemistry and medicine, and sufficient energy resources especially hydro-electric power.

The Hubei STIS is concerned with research, development, production and marketing. It is therefore inseparable from the development of specific industries, market competition, and the economic and social development ofthe province. In due course, industry-specific STIS's with characteristically local features would appear. Indeed, scientific and technological research at the provincial level is crucial in providing the backbone of a STIS that is so essential for the promotion of modern development.



Hubei Science and Technology Innovation System: A Theoretical Model

The basis of innovation is sound co-ordination involving a range of organizations and institutions and cutting across a spectrum of activities. Since the innovation system in Hubei is dependent on local resources and driven by the demands of socio-economic development, it is nevertheless a subsystem of the national innovation system. The Hubei system should thus be subjected to the regulations set by the national innovation policy and in line with national macro-economic policies and development trend. However, considering the fact that the character and structure of the regional economies of China are largely similar, the Hubei STIS should develop in accordance with the special human and physical resources of the province. The economic development of regions suggests that an innovation strategy formulated by a particular region can only be viable when there is a strong power base of science and technology, as is the case with Beijing or Shanghai. In regions without a strong tradition in science and technology, such as Shenzhen, the approach is one of "introduction, digestion, absorption and innovation". Hubei has a well-developed infrastructure and diverse resources for pursuing scientific and technological research. It can therefore depend on a research and development strategy that seeks to utilize its superior scientific and technology resources for the benefit of the market and economy and to sharpen the competitive edge of Hubei enterprises.

Therefore, the establishment of the Hubei STIS should emphasize its own capabilities, identify itself with the objectives and efforts with those of the innovation parties in the government, business, the universities and research institutes, financial institutions, the market and entrepreneurs, and to evolve a well co-ordinated provincial subsystem within the national system. Efforts to promote innovation should be efficiently implemented throughout the innovation chain beginning from scientific breakthroughs in research to their commercial application and the acquisition of market share. The pivotal role of such major cities as Wuhan, Yichang, Huangshi, Jingzhou and Xiangfan in Hubei should be given priority for their potential "demonstration" effects on surrounding areas. A more advanced stage in the development of the innovation system would be the involvement and support of high technology industrial development zones, university science and technology gardens. Wuhan's China Optics Valley and Gedian's China Drug Valley, coupled with sound entrepreneurial management and marketing of innovations. A model of the Hubei STIS is shown in Figure 16.2. The system consists of science and technology administration bodies and service bodies on the provincial and city levels.

Conclusion

The evolution of the Hubei STIS is a complex process involving science and technology, talents, funds, business enterprises, research institutes, service systems, policy environment, innovation atmosphere and other elements.

The basis of a technology innovation system is built upon scientific findings that, when translated into commercial applications, constitute breakthroughs of varying significance. In this system, the talents are the backbone; business enterprises, universities and research institutes are the innovation parties; funding provides the fuel to run the research programmes; marketing provides the bridge between theory and application, playing an essential role in spreading technological achievements; and the policy environment provides the impetus to the proper operation of the STIS. The Hubei science and technology innovation atmosphere should be fostered by the spirit of free enquiry, emancipation from the "small agricultural economy" mentality and self-contentment in life, and the break down of barriers erected by local areas, sectors or industries.



Equally important is the role of the different levels of government. All should play a positive role to facilitate scientific research and technological innovations in an environment that is conducive and stimulating. At the same time, too, the government is enjoined to attach importance to the construction of infrastructure, information networks, and the popularization of product standardization. It is only with faultless efficiency and smooth co-ordination that Hubei can hope to succeed in its development of a STIS to meet the challenges of modern economic development.

References

1. 陈宏愚、白希贤2001。《地方科技管理新论》，北京：学苑出版社 (CHEN Hongyu and BAI Xixian 2001. New Theories on Regional Science and Technology Management. Beijing: Academy Press).

2. 陈立2002。《中国国家战略问题报告》，北京﹕中国社会科学出版社(CHEN Li 2002. Report on China’s National Strategy Issues. Beijing: China Social Science Press).

3. 冯之浚1999。＜完善和发展中国国家创新体系＞，《中国软科学》，(1):55-58 (FENG Zhijun 1999. Perfecting and developing China’s national innovation system, Chinese Soft Sciences, 1:55-58).

4. 傅家骥、雷家肃、程源2003。《技术经济学前沿问题》，北京﹕经济科学出版社 (FU Jiaji, LEI Jiasu and CHENG Yuan 2003. Frontline Issues in Techno-Economics. Beijing: Economic Science Press).

5. 郑加强2002。建设可持续发展的区域科技创新体系，《科技与经济》，15(1):1-4 (ZHENG Jiaqing 2002. Developing sustainable regional science and technology innovation system, Science and Economy, 15(1): p1-4).