The making of an innovative region from a centrally planned economy: institutional evolution in Zhongguancun Science Park in Beijing

Literature on innovation regions has focused mostly on case studies in mature capitalist economies in North America and Europe, generating little knowledge of how innovation may take place in alternative institutional settings or how institutional transformation occurs in regions other than advanced capitalist economies. This paper traces the institutional evolution of Zhongguancun (ZGC), China's most prominent science and technology park, in the northwestern part of Beijing, in its pursuit of becoming China's own 'Silicon Valley'. Created during the planned economy, ZGC has traveled a radically different trajectory compared with most high-tech regions in advanced countries. Since the mid-1980s, the area has been able to transform itself from a quiet Beijing suburb designated for scientific research and higher education into a bustling hub of global high-tech business. In this paper I examine the changing patterns of behavior and interaction among the Chinese state, Chinese technology firms, and multinational technology corporations during three different stages of ZGC's development, illustrating the possibility of alternative institutional arrangements and the intricacy of institutional transformation. The paper then compares the formal and informal institutional characteristics of ZGC with those of California's Silicon Valley, signifying its strengths and weaknesses for fostering an innovative environment.