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Does foreign technology transfer spur domestic innovation? Evidence from the high-speed rail sector in China

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  • Lin, Yatang
  • Qin, Yu
  • Xie, Zhuan

Abstract

This paper investigates the introduction of high-speed railway (HSR) technology into China to study the local impacts of foreign technology transfer. The large-scale technology transfer project, covering specific technological categories and directly benefiting railway-related firms in various cities, enables us to describe how foreign technology is digested and spurs follow-up innovation in firms apart from directly receiving ones. We find that technology transfer generates significant localized spillovers to nearby firms not only in terms of more patents, but also as higher productivity and revenue growth. Moreover, technological similarity, rather than input-output linkages, plays a dominant role in explaining the knowledge spillover both at the firm level and the aggregate level, which indicates the importance of absorptive capacity in digesting foreign technologies. Overall, our paper sheds new light on the innovation policy of developing countries as well as the global business strategy of multinational corporations (MNCs).

Suggested Citation

  • Lin, Yatang & Qin, Yu & Xie, Zhuan, 2021. "Does foreign technology transfer spur domestic innovation? Evidence from the high-speed rail sector in China," Journal of Comparative Economics, Elsevier, vol. 49(1), pages 212-229.
    • Handle: RePEc:eee:jcecon:v:49:y:2021:i:1:p:212-229
    DOI: 10.1016/j.jce.2020.08.004
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    Cited by:

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    4. Bingyu Wu & Weidong Li & Jingyu Chen, 2022. "Networked Transport and Economic Growth: Does High-Speed Rail Narrow the Gap between Cities in China?," Sustainability, MDPI, vol. 14(10), pages 1-20, May.
    5. Bournakis, Ioannis & Mei, Jen-Chung, 2023. "Gender, firm performance, and FDI supply–purchase spillovers in emerging markets," International Economics, Elsevier, vol. 175(C), pages 90-105.
    6. Gaspar, Raymond, 2022. "Harnessing Foreign Technology to Improve Firm Performance: Evidence from Philippine Manufacturing Enterprises," ADBI Working Papers 1321, Asian Development Bank Institute.

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    More about this item

    Keywords

    Innovation; Foreign technology transfer; Knowledge spillover; China;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O25 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy

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