Abstract
The article considers the extent and mechanism of interaction between direct and indirect economic practices of innovation policy in the reforming China. It is shown that China as a country with "catching up" model of scientific and technological development is characterized by reliance on indirect (tax) incentives, that are actively used in the programs of industrialization. At the same time, the government research programs, defining scientific and technological potential of the country, are based on direct government funding. The challenges to China's innovation policy for the period up to 2020 have also been formulated.
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