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Indigenous and Foreign Innovation Efforts and Drivers of Technological Upgrading: Evidence from China

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  • Fu, Xiaolan
  • Gong, Yundan

Abstract

Summary This paper explores the role of indigenous and foreign innovation efforts in technological upgrading in developing countries, taking into account sectoral specificities in technical change. Using a Chinese firm-level panel dataset covering 2001-05, the paper decomposes productivity growth into technical change and efficiency improvement and examines the impact of indigenous and foreign innovation efforts on these changes. Indigenous firms are found to be the leading force on the technological frontier in the low- and medium-technology industries, while foreign-invested firms enjoy a clear lead in the high-technology sector. Collective indigenous R&D activities at the industry level are found to be the major driver of technology upgrading of indigenous firms that push out the technology frontier. While foreign investment appears to contribute to static industry capabilities, R&D activities of foreign-invested firms have exerted a significant negative effect on the technical change of local firms over the sample period.

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Bibliographic Info

Article provided by Elsevier in its journal World Development.

Volume (Year): 39 (2011)
Issue (Month): 7 (July)
Pages: 1213-1225

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Handle: RePEc:eee:wdevel:v:39:y:2011:i:7:p:1213-1225

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

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Keywords: indigenous innovation technology transfer FDI technology upgrading China;

References

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Citations

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Cited by:
  1. Lin, Justin Yifu & Rosenblatt, David, 2012. "Shifting patterns of economic growth and rethinking development," Policy Research Working Paper Series 6040, The World Bank.
  2. Fu, Xiaolan & Kaplinsky, Raphael & Zhang, Jing, 2012. "The Impact of China on Low and Middle Income Countries’ Export Prices in Industrial-Country Markets," World Development, Elsevier, vol. 40(8), pages 1483-1496.
  3. Franco, Eliane & Ray, Sangeeta & Ray, Pradeep Kanta, 2011. "Patterns of Innovation Practices of Multinational-affiliates in Emerging Economies: Evidences from Brazil and India," World Development, Elsevier, vol. 39(7), pages 1249-1260, July.
  4. Herrerias, M.J., 2013. "The environmental convergence hypothesis: Carbon dioxide emissions according to the source of energy," Energy Policy, Elsevier, vol. 61(C), pages 1140-1150.
  5. Iizuka, Michiko & Katz, Jorge, 2012. "Globalization and the changing institution for sustainability: The case of the Salmon farming industry in Chile," MERIT Working Papers 063, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
  6. Zhu, Shujin & Fu, Xiaolan, 2013. "Drivers of Export Upgrading," World Development, Elsevier, vol. 51(C), pages 221-233.
  7. Fu, Xiaolan & Yang, Qing Gong, 2009. "Exploring the cross-country gap in patenting: A Stochastic Frontier Approach," Research Policy, Elsevier, vol. 38(7), pages 1203-1213, September.
  8. Böing, Philipp & Müller, Elisabeth & Sandner, Philipp, 2013. "In-house R&D and External Knowledge Acquisition What Makes Chinese Firms Productive?," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 80037, Verein für Socialpolitik / German Economic Association.
  9. Vinod Mishra & Russell Smyth, 2012. "Technological Change and Wages in China: Evidence From Matched Employer-Employee Data," Development Research Unit Working Paper Series 28-12, Monash University, Department of Economics.
  10. 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.
  11. Shahid Yusuf, 2012. "From Technological Catch-up to Innovation : The Future of China’s GDP Growth," World Bank Other Operational Studies 12781, The World Bank.
  12. Chen, Fang & Mohnen, Pierre, 2009. "FDI, R&D and Innovation Output in the Chinese Automobile Industry," MERIT Working Papers 044, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
  13. Siping Luo & Mary E. Lovely & David Popp, 2013. "Intellectual Returnees as Drivers of Indigenous Innovation: Evidence from the Chinese Photovoltaic Industry," NBER Working Papers 19518, National Bureau of Economic Research, Inc.
  14. Herrerias, M.J. & Orts, Vicente, 2013. "Capital goods imports and long-run growth: Is the Chinese experience relevant to developing countries?," Journal of Policy Modeling, Elsevier, vol. 35(5), pages 781-797.

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