INTRODUCTION

This policy paper illuminates China’s successful advanced technology investment strategy, with the goal of drawing lessons for U.S. policymakers. In particular, we show that China’s investment strategy is much more decentralized than is usually realized. The broad directions of science and technology investment policy are set in Beijing, but much of the execution and funding is undertaken by provincial and municipal officials. We explain the pluses and minuses of China’s “local-facing” investment strategy, and what it means for American governors and mayors.

First, to provide a starting point, we document the persistent weakness in state and local investment spending in the United States. In the United…