Changing the Shanghai Innovation Systems

Abstract

This article intends to explain the interaction between the local innovation systems and the knowledge intensive type of foreign direct investment (FDI) in China since the mid-1990s.1 Since this period, more than thirty large multinational corporations (MNCs) have located their wholly-owned R&D centers in Shanghai because of its rich knowledge assets, competitive market, agglomeration of IT industrial cluster, and effective and flexible local governance. More importantly, the localisation of these R&D centers does not result in an isolated high-tech colony, but technology spillover in the form of new spin-offs, the mobility of trained engineers between MNCs and local firms, and the creation of a new technology research field through MNCs-University joint research labs. This in turn enriches and restructures Shanghai's existing innovation systems.