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Innovation, learning, and exporting in China: Does R&D or a technology index matter?

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  • Wignaraja, Ganeshan
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    Abstract

    This paper undertakes econometric analysis of innovation, learning, and exporting in automobiles and electronics firms in China using a large-scale 2003 dataset to identify the most appropriate innovation proxy. Drawing on recent literature on innovation and learning in developing countries, it tests two alternative proxies: (i) a technology index (TI) to capture a variety of minor activities involved in using imported technologies efficiently; and (ii) the research and development (R&D)-to-sales ratio, which represents formal technological efforts to create new products and processes, often at world frontiers. A higher TI increases the probability of exporting in both industries, while the R&D-to-sales ratio was not significant. Foreign ownership, technical manpower, and the characteristics of the general manager/chief executive officer also matter. The findings suggest that China's remarkable success in the export of automobiles and electronics since initiating an open-door foreign direct investment (FDI) policy in 1978 is linked to technology transfer from multinationals; systematic investments in and upgrading of minor technological activities (like search, engineering, quality management and design); and human capital. As China's per capita income rises over time, however, formal R&D activities are likely to become more important to sustain competitiveness and technological upgrading in automobiles and electronics.

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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Asian Economics.

    Volume (Year): 23 (2012)
    Issue (Month): 3 ()
    Pages: 224-233

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    Handle: RePEc:eee:asieco:v:23:y:2012:i:3:p:224-233

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    Web page: http://www.elsevier.com/locate/asieco

    Related research

    Keywords: Innovation; Technological capabilities; R&D; Exports; China;

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    References

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    Cited by:
    1. Jing Cao & Felix Groba, 2013. "Chinese Renewable Energy Technology Exports: The Role of Policy, Innovation and Markets," Discussion Papers of DIW Berlin 1263, DIW Berlin, German Institute for Economic Research.
    2. Wignaraja, Ganeshan, 2013. "Understanding Innovation in Production Networks in East Asia," ADBI Working Papers 410, Asian Development Bank Institute.

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