An aging population, rising debt, and declining returns on investment mean that the country must promote innovation to secure a high-growth future, a new McKinsey Global Institute report finds.
How innovative is the Chinese economy? On the surface, the answer seems clear: by traditional measures, China is innovating on an increasingly large scale and is close to becoming the global innovation leader.
The transition to becoming an innovation leader is critical; China needs to succeed at innovation in all types of industries to raise productivity and create the high-value-added jobs that are needed as wages rise and millions more workers migrate to China's cities.
Despite the headline numbers, the impact of innovation on China's GDP growth (as measured by multifactor productivity2 ) has declined in recent years.
Traditional approaches to assessing innovation involve evaluating the innovative capacity of nations and organizations-numbers of PhDs, patents, and technical papers published, for example. But for this study, the McKinsey Global Institute used an alternate method that captures the actual impact of innovation.
See more here and download the pdf of the report here.