Household Sector Innovation in China: Impacts of Income and Development

In this paper, we report findings from a first nationally-representative survey of household sector innovation in China, and offer two major new findings to that literature stream. First, we find that 23.2 million Chinese citizens are household innovators when we include householders who develop innovations for any motivation, not just for their own use. When we include only householders who innovate motivated by personal need, as was done in previous household sector innovation surveys, the estimate is 16.5 million individuals. Reanalysis of data obtained from two earlier national surveys show that the same adjustment factor of approximately 1.5 holds in those samples too. If this result holds in other nations as well, it will represent a significant increase in the measured frequency of household sector innovation in general. A second major finding from our China survey is that higher individual incomes are strongly associated with increased frequency of household sector innovation and diffusion. Income was not measured in previous national surveys of household sector innovation. When, in this study, we combine personal income effects with the positive impact of educational levels and technical training on the frequency of household sector innovation and also diffusion, a general picture emerges of a phenomenon that increases along with gains in national development. That is, as national levels of income, education and technical knowledge increase globally, a related increase in the economic importance of household sector innovation can be anticipated. Both of these novel findings, we think, contribute substantially to researchers understanding of and ability to manage the phenomenon of household sector innovation.