Comparing GBA and Bay Area’s innovative economy
Population of the Guangdong-Hong Kong-Macao Greater Bay Area in comparison to the world’s other major bay areas in 2019 (in millions) Source: STATISTA 2021
The Guangdong-Hong Kong-Macao Greater Bay Area (GBA) in China and the San Francisco Bay Area (Bay Area) in the United States are two famous world-leading international innovative economic hubs. The two are comparable in their innovative economic development, since they are both bay areas with unique geographical positioning, a similar orientation towards high and new technology industries, as well as economic systems and development patterns pillared by scientific and technological innovation.
However, the two bay areas differ distinctly in their basic resources for developing an innovative economy. With a size of about 55,910 square kilometers, the GBA is three times as large as the Bay Area, which covers nearly 18,130 sqkm. Meanwhile, in 2019, the population density of the GBA was also three times that of the Bay Area, with the former reaching nearly 1,300 people per sqkm, and the latter 428 people per sqkm. In terms of economic aggregates, the GBA’s GDP reached around 1.68 trillion USD in 2019, making the region one of the most open and dynamic economic zones in China. In comparison, the Bay Area, as the fifth largest metropolitan district in the U.S, had a GDP of around 0.89 trillion USD in 2019. This means the economic output of the GBA is 1.8 times that of the Bay Area. Generally speaking, the GBA is bigger, more populated, and has a larger economic output, while the Bay Area is less densely populated.
Innovative industries
The two bay areas have both similarities and differences in regards to their innovative economy industry types. The similarities can be divided into two parts.
First, science and technology innovation drives the leading industries for both economic zones. Innovative economic industries in the GBA include biomedicine, information technology (IT), internet platforms, new materials, international finance, cultural creativity and more, while the ones in the Bay Area mainly include IT, biomedicine, environmental technology, international trade, finance, and tourism. Competitive industries in both bay areas include high-tech and new technology industries, including IT, electronic manufacturing, and high-end equipment manufacturing.
Second, both bay areas enjoy a rather mature industrial ecology tailored to their innovative economies. Silicon Valley, in the Bay Area, and Shenzhen City, in the GBA, are both globally renowned for their innovative economic industries, products, and business models. Each is equipped with a complete industrial chain that covers all industry categories, and both bays have sound industrial ecologies with promising industrial markets.
It is thus not surprising that the GBA is the key innovative economic hub in southern China, and the Bay Area is the key science and technology innovation center that leads the globe. In particular, Silicon Valley has become synonymous with a global high-tech zone.
In spite of their similarities, the innovative economies of the GBA and the Bay Area differ in three significant ways. First, their science and technology innovative enterprises have different agglomeration degrees. Specifically, the Bay Area enjoys a higher degree of agglomeration in new high-tech enterprises than the GBA.
Second, they differ in their industrial mixes. The Bay Area has a simpler industrial structure while the GBA has a wider variety of industries. The Bay Area’s high-tech and new technology industries concentrate on information communication, electronic manufacturing, high-end equipment manufacturing, and so forth. In contrast, the GBA’s innovative economy is more expansive, also covering cultural creativity, modern logistics, new energy, intelligent manufacturing, and more.
Third, governments play different roles supporting innovative economic industries in the GBA and the Bay Area. The Bay Area has received less government intervention, which led to a relatively simpler leading industry ecology. It has nurtured a mature industrial cluster, in which all industries are in close contact with one another. Whereas, in the GBA, the growth and industrial division of its innovative economic industries are often led and regulated by the government via industrial development planning.
R & D capacities
Research and development is the fuel for modern bay areas when developing an innovative economy. Both the Bay Area and the GBA are home to many famous universities, but it is easy to see from global university rankings that the ones in the Bay Area are more highly ranked than those in the GBA.
Since the GBA is larger and more populated than its counterpart on the West Coast of the United States, it accommodates more research institutions—nearly 150 colleges and universities, with 43 national research laboratories—in comparison to 30 universities and merely five national research laboratories in the Bay Area. Still, the Bay Area’s famous universities have a stronger pull on talent for the local innovative economy than the GBA’s universities. Each of the five Bay Area sub-regions boasts a high-level university cluster led by world-class universities. Together, the multicentric university agglomerations in the San Francisco bay have created a trans-regional knowledge network, in which all higher education institutions complement one another in a way that firmly supports a booming local innovative economy.
In comparison, the GBA has fewer famous research universities. To make matters worse, the only universities in the region tend to work in isolation from one another, which leads to inadequate academic exchange and talent flow, and poor cooperation in stimulating employment and entrepreneurship opportunities. Consequently, universities in the GBA have poor links to technological innovation.
Leading enterprises
Enterprises are the main players in, and carriers of, technological innovation. Naturally, the two bay areas gather many top-ranking companies. Generally speaking, the GBA hosts more Fortune Global 500 corporations than the Bay Area, with 20 of its enterprises on the list in comparison to 11 in the Bay Area in 2019.
To be specific, the GBA features a relatively low industrial concentration ratio and prominent geographical concentration, yet the average size and economic benefits of its enterprises are relatively small. By contrast, the top-ranking companies in the San Francisco Bay Area are more industrially concentrated, less geographically concentrated, more evenly distributed, and more high-tech-related.
In terms of industrial distribution, the GBA’s top 500 corporations have a wider range of industry types, including automobiles, electricity, home appliances, real estate, retail, internet platforms, finance, and insurance, while the ones in the Bay Area are dominated by high-tech enterprises.
Level of globalization
Theoretically speaking, the more involved a bay area is in global economic activities, the more indispensable it becomes for the global economy. Globalization indicators show that the GBA is more globalized than the Bay Area in that it has a larger trade volume, more international airports, more ports that are listed on the Lloyd’s List One Hundred Ports, and higher passenger throughput and port container throughput.
In 2019, the trade volume from the GBA exceeded two trillion USD, surpassing California’s total trade volume of 200 billion USD, where the Bay Area is located.
In summary, both the GBA and the Bay Area have their advantages, and it might be fair to say that they are equally matched. The two have their leading industries in common, the high-tech and new technology industries. Meanwhile, they have both established mature and enabling industrial ecologies for new high-tech enterprises. The Bay Area’s multicentric university clusters are notably more effective in driving technological innovation than GBA’s. It’s also worth-mentioning that the GBA is home to more and faster-growing top 500 global corporations, while having a greater market potential. Last but not least, the GBA is more economically globalized than the Bay Area.
Hu Wenlong is from the Institute of Industrial Economics at the Chinese Academy of Social Sciences.
Edited by WENG RONG