Determinants of Industrial Innovation in China: Evidence From its Recent Economic Census

This study examines the sources of technological innovation in Chinese industries using the 2004 economic census data. On the one hand, it analyzes the relationships between patent grants and new product sales. On the other hand, it analyzes the relationships among in-house R&D, technology transfer from foreign and Chinese domestic technology markets, spillover effects of foreign investment, as well as export. The study reveals that in-house R&D has become the most important source for industrial innovation in China. In-house technological efforts are critical for developing original innovations as well as for absorbing the technologies transferred from external agencies. However, neither technologies transferred from foreign countries nor those from the domestic technology market are playing significant roles in China’s industrial innovation. The spillover effect of foreign investment on patent grants is strong and significant, though its impact on new product sales is insignificant. Export shows negative, though insignificant, impact on patent grants, but positive, strong, and significant effects on new product development. Overall, the results of this study demonstrate the critical role of in-house R&D in China’s industrial innovation.

[1]  J. Fagerberg,et al.  The Oxford handbook of innovation , 2006 .

[2]  Håkan Persson,et al.  Foreign investment and spillover efficiency in an underdeveloped economy: Evidence from the Mexican manufacturing industry , 1983 .

[3]  H. Katrak Economic analyses of Industrial Research Institutes in developing countries: the Indian experience , 1998 .

[4]  Andrew Gillespie,et al.  Technological change and regional development , 1983 .

[5]  Gordon H. Hanson,et al.  Spillovers, Foreign Investment, and Export Behavior , 1994 .

[6]  G. Jefferson,et al.  R&D and Technology Transfer: Firm-Level Evidence from Chinese Industry , 2003, Review of Economics and Statistics.

[7]  Yih-Chyi Chuang *,et al.  FDI, trade, and spillover efficiency: evidence from China's manufacturing sector , 2004 .

[8]  Ann E. Harrison,et al.  Do Domestic Firms Benefit from Direct Foreign Investment? Evidence from Venezuela , 1999 .

[9]  S. Ho Technology Transfer to China During the 1980s-How Effective? Some Evidence from Jiangsu , 1997 .

[10]  J. Dunning Explaining International Production , 1988 .

[11]  Daniel A. Levinthal,et al.  Innovation and Learning: The Two Faces of R&D , 1989 .

[12]  Yifei Sun What Matters for Industrial Innovation in China: R&D, Technology Transfer or Spillover Impacts from Foreign Investment? , 2010 .

[13]  JR-TSUNG Huang Spillovers from Taiwan, Hong Kong, and Macau Investment and from Other Foreign Investment in Chinese Industries , 2004 .

[14]  Denis Fred Simon,et al.  China's Drive to Close the Technological Gap: S&T Reform and the Imperative to Catch Up , 1989, The China Quarterly.

[15]  Zhiqiang Liu Foreign Direct Investment and Technology Spillover: Evidence from China , 2002 .

[16]  Yifei Sun,et al.  Sources of Innovation in China's Manufacturing Sector: Imported or Developed in-House? , 2002 .

[17]  J. Konings,et al.  Evidence of Firm Heterogeneity: FDI Spillovers in the Chinese Manufacturing Sector , 2010 .

[18]  Roderick Martin,et al.  Technology, globalization and economic performance , 1997 .

[19]  Xiaohui Liu,et al.  Innovation performance and channels for international technology spillovers: Evidence from Chinese high-tech industries , 2007 .

[20]  Vinish Kathuria,et al.  Productivity spillovers from technology transfer to Indian manufacturing firms , 2000 .

[21]  Xiaoyun Yu,et al.  Ownership, performance, and innovation in China's large- and medium-size industrial enterprise sector , 2003 .

[22]  Peter J. Buckley,et al.  The Impact of Inward FDI on the Performance of Chinese Manufacturing Firms , 2002 .

[23]  Marjolein C.J. Caniëls,et al.  Technology, Growth and Unemployment across European Regions , 1997 .

[24]  G. Jefferson,et al.  Science and Technology Take-off in China?: Sources of Rising R&D Intensity , 2007 .

[25]  Xielin Liu,et al.  Comparing innovation systems: a framework and application to China’s transitional context , 2001 .

[26]  J. Fagerberg Innovation: A Guide to the Literature , 2003 .

[27]  S. Globerman Foreign Direct Investment and `Spillover' Efficiency Benefits in Canadian Manufacturing Industries. , 1979 .

[28]  Elhanan Helpman,et al.  Endogenous Innovation in the Theory of Growth , 1993 .

[29]  K. Green National innovation systems: a comparative analysis , 1996 .

[30]  Carlos M. Correa Argentina's national innovation system , 1998 .

[31]  Jan Fagerberg,et al.  Technology and International Differences in Growth Rates , 1994 .

[32]  D. Parker,et al.  Foreign direct investment and productivity spillovers in the Chinese manufacturing sector , 2001 .

[33]  N. Rosenberg Why do firms do basic research (with their own money) , 1990 .

[34]  Yifei Sun,et al.  China's National Innovation System in Transition , 2002 .

[35]  Xiaowen Tian Accounting for sources of FDI technology spillovers: evidence from China , 2007 .

[36]  Anthony Knighton,et al.  Images of China , 1989 .

[37]  Yadong Luo Selling China: Foreign Direct Investment During the Reform Era , 2005 .

[38]  N. Crespo,et al.  Determinant Factors of FDI Spillovers – What Do We Really Know? , 2007 .

[39]  S. Young,et al.  Technology Transfer to China Through Foreign Direct Investment , 1996 .

[40]  J. Katz,et al.  Structural reforms and technological behaviour: The sources and nature of technological change in Latin America in the 1990s , 2001 .

[41]  G. Jefferson,et al.  Returns to research and development in Chinese industry: Evidence from state-owned enterprises in Beijing , 2004 .

[42]  M. Bell,et al.  Technological Accumulation and Industrial Growth: Contrasts Between Developed and Developing Countries , 1993 .

[43]  J. Schumpeter,et al.  Capitalism, Socialism and Democracy , 1943 .

[44]  Yifei Sun,et al.  Determinants of Foreign Patents in China , 2003 .

[45]  Qiwen Lu,et al.  The organization of innovation in a transitional economy: business and government in Chinese electronic publishing , 2001 .

[46]  Simeon Djankov,et al.  Foreign Investment and Productivity Growth in Czech Enterprises , 1999 .

[47]  Magnus Blomstrom FOREIGN INVESTMENT AND PRODUCTIVE EFFICIENCY: THE CASE OF MEXICO* , 1986 .

[48]  E. Wolff,et al.  Multinational Corporations and Productivity Convergence in Mexico , 1989 .

[49]  Mona Haddad,et al.  Are there positive spillovers from direct foreign investment?: Evidence from panel data for Morocco , 1993 .

[50]  E. Malecki Technology and Economic Development: The Dynamics of Local, Regional, and National Change , 1991 .

[51]  D. Parker,et al.  The impact of foreign direct investment on labour productivity in the Chinese electronics industry , 2001 .

[52]  Q. Lu China's leap into the information age , 2000 .

[53]  Zhiqiang Liu Foreign Direct Investment and Technology Spillovers: Theory and Evidence , 2008 .

[54]  Erik Baark,et al.  Fragmented Innovation: China's Science and Technology Policy Reforms in Retrospect , 1991 .

[55]  China. State Statistical Bureau,et al.  Statistical yearbook of China , 1985 .

[56]  Albert G Z Hu,et al.  FDI Impact and Spillover: Evidence from China's Electronic and Textile Industries , 2002 .

[57]  Commercialized Technology Transfer in China 1981-86: The Impact of Science and Technology Policy Reforms , 1987, The China Quarterly.

[58]  Xiaohui Liu,et al.  Does foreign direct investment facilitate technological progress?: Evidence from Chinese industries , 2003 .

[59]  Jon Sigurdson,et al.  Science and technology in post-Mao China , 1989 .

[60]  Richard P. Suttmeier,et al.  Science, Technology and China's Drive for Modernization. , 1980 .

[61]  中華人民共和国国家統計局 Statistical yearbook of China , 1986 .

[62]  E. Feigenbaum Soldiers, Weapons and Chinese Development Strategy: The Mao Era Military in China's Economic and Institutional Debate , 1999, The China Quarterly.

[63]  D. Lo China as a ‘ Model ’ of Utilizing Foreign Capital for Economic Development : Perceptions , Observations and Interpretations , 2006 .

[64]  R. Caves Multinational Firms, Competition, and Productivity in Host-Country Markets , 1974 .