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The dynamics of China¡¯s expenditure on R&D

Author

Listed:
  • LI Ping

    (School of Economics, Shandong University of Technology, Zibo 255049, China)

  • YU Guocai

    (School of Economics, Shandong University of Technology, Zibo 255049, China)

Abstract

R&D investment is enterprises¡¯ strategy based on the market demand on innovative products and its production capacity for them. Enlarging market demand would spur the enterprises¡¯ R&D input and the enhancement of technology state in production ability could have a complex effect on less developed countries¡¯ R&D expenditure. With the measurement of China¡¯s technology state compared to the United States and Japan, this paper explores with the state space model the dynamic effects of determinants on China¡¯s R&D expenditure with the data during 1987¨C2006. The result illustrates that the growing national income, a proxy of domestic market demand, impedes the further R&D investment in China due to the enormous demand for necessities dominated by lower income class, and the income inequality is the major incentive for R&D investment via the higher pricing on the wealthy group, and that the improvement of technology state reduces the innovation risk and plays an important role in stimulating R&D expenditureClassification-JEL: F2, H3, L6, O3

Suggested Citation

  • LI Ping & YU Guocai, 2009. "The dynamics of China¡¯s expenditure on R&D," Frontiers of Economics in China-Selected Publications from Chinese Universities, Higher Education Press, vol. 4(1), pages 97-109, March.
    • Handle: RePEc:fec:journl:v:4:y:2009:i:1:p:97-109
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    File URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-009-0006-3
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    More about this item

    Keywords

    R&D; effective demand; technology state; state space model;
    All these keywords.

    JEL classification:

    • F2 - International Economics - - International Factor Movements and International Business
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • L6 - Industrial Organization - - Industry Studies: Manufacturing
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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