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Changing Engines of Growth in China: From Exports, FDI and Marketization to Innovation and Exports

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  • Furong Jin
  • Keun Lee
  • Yee‐Kyoung Kim

Abstract

This paper investigates the changing sources of growth in post‐reform China. Using cross‐province regressions, this paper finds that, in earlier periods, exports, foreign direct investment and marketization were significantly related to per capita income growth, whereas since the late 1990s, foreign direct investment and marketization have lost their significance and have been replaced by new sources of growth, such as innovation and knowledge, with only exports continuing to be important. This finding is robust after controlling for other variables representing other economic policies and provincial characteristics. We also tackle the possible endogeneity of innovation variables using the instrumental variables estimation method.

Suggested Citation

  • Furong Jin & Keun Lee & Yee‐Kyoung Kim, 2008. "Changing Engines of Growth in China: From Exports, FDI and Marketization to Innovation and Exports," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 16(2), pages 31-49, March.
    • Handle: RePEc:bla:chinae:v:16:y:2008:i:2:p:31-49
    DOI: 10.1111/j.1749-124X.2008.00105.x
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    Cited by:

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    2. Thomas Goda, Santiago Sánchez, 2022. "Export Market Size Matters: The effect of the market size of export destinations on manufacturing growth," Documentos de Trabajo CIEF 20531, Universidad EAFIT.
    3. Gunby, Philip & Jin, Yinghua & Robert Reed, W., 2017. "Did FDI Really Cause Chinese Economic Growth? A Meta-Analysis," World Development, Elsevier, vol. 90(C), pages 242-255.
    4. Giorgio Prodi & Francesco Nicolli & Federico Frattini, 2020. "Embeddedness and local patterns of innovation: evidence from Chinese prefectural cities," Economic Complexity and Evolution, in: Andreas Pyka & Keun Lee (ed.), Innovation, Catch-up and Sustainable Development, pages 283-307, Springer.
    5. Guoqing Zhao & Zhongyuan Zhang, 2011. "Does method selection matter? A new look at FDI and human capital in Chinese high-tech industries," Frontiers of Economics in China, Springer;Higher Education Press, vol. 6(1), pages 36-54, March.
    6. Yanrui Wu, 2012. "R&D Behaviour in Chinese Firms," Economics Discussion / Working Papers 12-26, The University of Western Australia, Department of Economics.
    7. Hyuntai Lee & Keun Lee, 2022. "Institutions Matter Differently Depending On The Ownership Types Of Firms: Interacting Effects On Firm Productivity In China," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 67(04), pages 1185-1208, June.
    8. Huang, Liangxiong & Ma, Minghui & Wang, Xianbin, 2022. "Clan culture and risk-taking of Chinese enterprises," China Economic Review, Elsevier, vol. 72(C).
    9. Sungho Rho & Keun Lee & Seong Hee Kim, 2015. "Limited Catch-up in China’s Semiconductor Industry: A Sectoral Innovation System Perspective," Millennial Asia, , vol. 6(2), pages 147-175, October.
    10. He, Xiyou & Mu, Qing, 2012. "How Chinese firms learn technology from transnational corporations: A comparison of the telecommunication and automobile industries," Journal of Asian Economics, Elsevier, vol. 23(3), pages 270-287.
    11. Yuqing Xing & Manisha Pradhananga, 2013. "How Important is Exports and FDI for China's Economic Growth?," GRIPS Discussion Papers 13-04, National Graduate Institute for Policy Studies.
    12. Xing, Yuqing & Pradhananga, Manisha, 2013. "How Important are Exports and Foreign Direct Investment for Economic Growth in the People’s Republic of China?," ADBI Working Papers 427, Asian Development Bank Institute.

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