The innovation dynamics of Zhejiang model: The case of Wenzhou

Since China´s reform and opening to the outside world, the performance of Zhejiang Model in promoting the local economic development has attracted worldwide attention. Zhejiang´s private enterprises gradually reduce production costs and improve product quality with incremental innovation, and have gained great competitive advantages. However, with the depleting incremental innovation opportunities, Zhejiang´s economy is confronted with the transition from incremental innovation to radical innovation. This paper takes Wenzhou City, the most typical and early mature economy in Zhejiang, as an example, to analyze the influence of the production model of enterprises cluster with highly specialized division of labor and the laissez-faire policy of local government upon the transition of innovation.