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Industrial policy intensity, technological change, and productivity growth: Evidence from China

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Listed:
  • Mao, Jie
  • Tang, Shiping
  • Xiao, Zhiguo
  • Zhi, Qiang

Abstract

China has employed various industrial policies and science & technology (S&T) policies in its effort of catching up with the world technology frontier. This paper evaluates the effect of China's industrial policies and S&T policies with a newly constructed measurement of policy intensity and a national database of firm surveys. We argue that whether China's industrial policies and S&T policies contribute to productivity growth in an industry is conditioned by the relative development stage of that industry to that of the world frontier. Specifically, we argue that China's industrial policies and S&T policies contribute to greater productivity growth in globally emerging high-tech industries than in domestically catching-up and domestically mature industries. We then provide empirical evidence for our hypotheses. Our study identifies a new driver behind China's economic success in the past decades.

Suggested Citation

  • Mao, Jie & Tang, Shiping & Xiao, Zhiguo & Zhi, Qiang, 2021. "Industrial policy intensity, technological change, and productivity growth: Evidence from China," Research Policy, Elsevier, vol. 50(7).
    • Handle: RePEc:eee:respol:v:50:y:2021:i:7:s0048733321000895
    DOI: 10.1016/j.respol.2021.104287
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    3. Junguo Shi & Bert M. Sadowski & Xinru Zeng & Shanshan Dou & Jie Xiong & Qiuya Song & Sihan Li, 2023. "Picking winners in strategic emerging industries using government subsidies in China: the role of market power," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-8, December.
    4. Hu, Yefei & Liu, Dayong, 2022. "Government as a non-financial participant in innovation: How standardization led by government promotes regional innovation performance in China," Technovation, Elsevier, vol. 114(C).
    5. Keren Chen, 2022. "Industrial Policy’s Effect on Cross-Border Mergers’ Decisions—Theoretical and Empirical Analysis," Sustainability, MDPI, vol. 14(20), pages 1-25, October.
    6. Godinho, Manuel Mira & Simões, Vítor Corado, 2023. "The Tech Cold War: What can we learn from the most dynamic patent classes?," International Business Review, Elsevier, vol. 32(6).
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    8. Lee Branstetter & Guangwei Li, 2023. "The Challenges of Chinese Industrial Policy," NBER Chapters, in: Entrepreneurship and Innovation Policy and the Economy, volume 3, pages 77-113, National Bureau of Economic Research, Inc.

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    More about this item

    Keywords

    Industrial policy; Science & technology (S&T) policy; Productivity growth; Strategic emerging industries (SEIs); Global value chains; China;
    All these keywords.

    JEL classification:

    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
    • 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
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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