Research On Synergy Effects In Regional Innovation Systems Of The Yangtze-Delta

Innovation is the essential dynamic driver of regional economic development. Hence, establishing the regional innovation system can be regarded as a shortcut taken to strengthen capabilities of independent innovation and develop an innovative region. China, as a large developing country still in the course of economic transition, has taken on imbalance in its regional economic development. The experience and patterns of innovation systems in China's developed regions have valuable demonstration effects on less developed regions, and can be used for reference. It is true that the efficiency of regional innovation can be enhanced in various manners. However, compared to traditional patterns, modern scientific research is highly merged, and innovation tends to be considerably complicated and uncertain. Consequently, the information costs of innovation synergy become remarkably high. Thereby, the improvement on synergy degree can be regarded as the key to reduction of information costs and enhancement of regional innovation efficiency. The Yangtze-Delta has the most outstanding comprehensive strength in China. The dominant provinces and cities within this region, namely Zhejiang and Jiangsu Provinces as well as Shanghai Municipality, have established typical modes of innovation systems and accumulated abundant resources for regional innovation. However, some problems still exist in the allocation of innovation resources and need to be resolved. Firstly, the specialization and collaborative construction are not yet accurate. Secondly, over-repetition is considerably severe. Thirdly, information and other resources are barely shared, which resulted in repeated programs and research. The resulting lack of overall innovation synergy has now become a dominant restraint to advancing efficiency of innovation resources in the Yangtze-Delta. Therefore, the improvement on synergy degree becomes the key to enhancement of regional innovation efficiency. In view of the above, this paper aims to study the synergy effects in regional innovation systems as well as the mechanisms for improving innovation synergy on the basis of large transition economy. With some findings and conclusions, this paper attempts to bring forward some general clues and counter-measures, and hereby help to improve China's regional innovation efficiency.This paper seeks to make original progress in following aspects:1. This paper develops the connotation of innovation synergy with a regional and spatial perspective, and reveals that the dynamic driver of regional innovation synergy lies in the synergy residual. In the existing research, much attention has been paid to innovation synergy. The dynamic drivers, however, are rarely studied. It is found that, the expected synergy residual of every innovation body works as the dynamic driver for regional innovation synergy. However, information may well be distorted with innovation bodies pursuing their residual, which would reduce the overall synergy degree and residual. In essence, when pursuing synergy residual and improving synergy degree, innovation bodies with asymmetric information design and use effective institutions. In this way, they endeavor to strengthen complimentary effects and weaken conflicting effects, and hereby gain net benefits.2. This paper, via a geometric model, analyzes the dominant restraints to the achievement and enhancement of synergy residual. It is found that, under circumstances of complete information, synergy residual can be achieved and enhanced by complementary effects on three dimensions, namely rational division of labor and moderate competition as well as amalgamation. However, information barriers may arise from transaction uncertainty of three types on technology market, as well as all sorts of dilemma in inter-provincial governments'decision-making on R&D activities. One of the resulting troubles may be false division of labor within the region. In other words, given R&D resources are wrongly allocated, which is featured by over-repetition on low levels and inadequate valuable R&D input. Another trouble would be over-competition within the regional, which intensifies internal friction and makes innovation unsustainable. For a third one, regional amalgamation may well exist in name only, with the regional innovation system becoming rigid and inefficient. To sum up, information barriers, false division of labor, over-competition, void amalgamation, and low synergy degree ensue. Such conflicting effects will bring down the synergy degree and hamper the achievement of synergy residual. Therefore, it is urgent to weaken the conflicting effects. The key to this goal, however, lies in the governments' information barriers in regional innovation synergy.3. This paper empirically studies synergy degree of the Yangtze-Delta, and verifies the discrepancy of the above-mentioned information barriers among different regions. It is found that, the overall synergy degree of this regional is rather low, while the separate degree of order within each province and municipality is relatively high. Such a contrast reveals that, despite governments manage to initiate the inter-provincial innovation system through efforts on the environment and institutions as well as regulations, this government-dominated innovation system is to some extent defective. For one thing, with the "heart" of synergy moving higher, market mechanism plays a less important role in R&D resource allocation, while the distortion in interests and information barriers become more severe. For another thing, with each province and municipality pursuing their separate interests and causing distortions, information barriers to inter-provincial synergy becomes more intense, which brings down the overall synergy degree within the delta. For each province and municipality, the "heart" of synergy is rather low, and market mechanism plays a much more important role in R&D resource allocation. Therefore, their interests are less severely distorted and information barriers are limited. Meanwhile, by virtue of significant market role, governments will encounter less information barriers when making programs and decisions on scientific innovation activities, leading to a higher degree of innovation synergy. Obviously, the key to resolve information barriers and improve synergy degree lies in the establishment of complimentary rather than substitute relationship between market operation and government regulation.4. This paper probes into the effective resolutions to information barriers with a perspective of mechanism design. It is found that, information barriers in the process of regional innovation synergy takes on specific features. Firstly, they arise from administrative planning of R&D resources allocation, which discounts the radical role of market. Secondly, they arise from the high transaction costs involved in the hi-tech innovation activities themselves. It is difficult for governments to resolve such information barriers via conventional measures. However, it would be wise to establish a dynamic regulation mechanism featured by incentive compatibility and market domination. By virtue of such a new regulation mechanism, the rectifying role of market can be ex-ante and dynamic, rather than ex-post and static. In this way, costs to resolve information barriers can be considerably reduced, and therefore the overall efficiency of regional innovation synergy can be enhanced.