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Innovation Breakthrough: Why Shenzhen Performs Better?

By Zhao Changwen, Research Department of Industrial Economy of DRC, Zhu Hongming, Research Institute of Finance of DRC & Huang Shan, University of International Business and Economics

Research Report No 160, 2015 (Total 4845)


This paper attempts to explore the pattern of innovation and entrepreneurship through a comparison between Shanghai and Shenzhen. Even though Shenzhen is less competitive in innovation bases such as education resources, scientific research, R&D funding input as well as aggregate volumes of financial and economic resources, it performs far much better than Shanghai as regards the number of patent application and development of innovative enterprises and strategic emerging industries. Differences in innovation ecology can well explain such a sharp contrast between the two cities. To be more exact, in Shenzhen, enterprises are more active and market-oriented and relevant industrial supporting system is more well-equipped while financial system tends to be more innovative-friendly and cultural environment is better dovetailed with innovation and entrepreneurship. It shows that the key to promoting innovation and entrepreneurship is to insist on demand-oriented innovation with enterprises as the major players in innovation and to give full play to market as a decisive role in resource allocation in innovation and entrepreneurship. At the same time, government should also step in to create an ecological system favorable for innovation and entrepreneurship in aspects such as economic structure, financial structure, cultural environment and supporting policies.