Shaping China’s Innovation Future
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Shaping China’s Innovation Future

University Technology Transfer in Transition

John L. Orcutt and Hong Shen

Shaping China’s Innovation Future employs a thorough analysis of a combination of factors including: the role of law and China’s legal system; economic theory and the development of China’s economy; China’s educational, intellectual property, and financial systems; China’s innovation capacity; and Chinese culture. Though the recommendations on how to improve China’s technology commercialization system are unique to China, the scope of the research makes the conclusions found here applicable to other countries facing similar challenges.
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Chapter 4: Developing a Legal System that Supports the Market-based Transactions of Bayh–Dole Strategy

John L. Orcutt and Hong Shen


4. Developing a legal system that supports the market-based transactions of a Bayh–Dole strategy Let the laws roll with the times and there will be good government. . . But let the times shift without any alteration in the laws and there will be disorder. – Han Fei Tzu (d. 233 BC), chief theoretician of China’s Legalist school1 Economic actors will invest in the creation, adoption and dissemination of technology if they believe they will receive a profitable return from that effort. Without that belief, it makes little sense for them to invest the time and effort required to undertake such burdensome activities. China’s efforts to create a market-based innovation system would likely go for naught if the market reforms were not supported by a complementary effort to build expectations among its various actors that they can profit from participating in such a system. A country’s legal system can play a major role in providing the expectations needed for economic actors to act productively. A legal system can create confidence in property ownership that incentivizes property owners to develop and employ their property in a productive manner. It can also create confidence in the enforceability of contracts, which substantially reduces the overall cost of economic exchanges. While a formal legal system is not the only technique that policymakers can employ to create the needed expectations,2 it is the dominant approach in industrialized countries and has become a major point of focus in many developing countries.3 One explanation for China’s technology transfer...

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