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Domestic Innovation and Chinese Regional Growth, 1991-2004

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  • William Latham

    ()
    (Department of Economics,University of Delaware)

  • Hong Yin

    ()
    (Department of Economics,University of Delaware)

Abstract

We examine the return to innovation in terms of economic growth at the provincial level to assess whether or not policies that promote R&D, such as China’s Science and Technology Policy, have been productive for all of China’s regions. The return to innovation at the provincial level is estimated using a value-added Cobb-Douglas production function. The measure of the effect of innovation (patenting activity) is valued-added industrial output. The data are a balanced panel for 30 provinces for the period 1991-2004. We find that the production function including innovation fits the Chinese provincial level data well. These estimates indicate that technology plays a positive role in industrial growth at the provincial level; however, the contribution of technology is far too small, which indicates that China’s economic growth is largely driven by the factor inputs. The results support the views that the linkages between innovation activity and commercialization of new technology are weak within Chinese domestic firms which have difficulties in exploiting and adopting the new technologies. The results also indicate that the inter-regional technology spillovers are positive but relatively small and weak, compared to the European regions and the states in the US. The estimated results further confirm that the impact of industrial reforms during the period of 1994-99 on China’s technological development is negative, as there seems to be neither exogenous technical progress nor technology’s contribution to the value-added industrial output during those years.

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File URL: http://graduate.lerner.udel.edu/sites/default/files/ECON/PDFs/RePEc/dlw/WorkingPapers/2008/UDWP2008-20.pdf
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Bibliographic Info

Paper provided by University of Delaware, Department of Economics in its series Working Papers with number 08-20.

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Length: 26 pages
Date of creation: 2008
Date of revision:
Handle: RePEc:dlw:wpaper:08-20.

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Keywords: China; patents; productivity; innovation; regions;

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References

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  1. Zvi Griliches, 1990. "Patent Statistics as Economic Indicators: A Survey," NBER Working Papers 3301, National Bureau of Economic Research, Inc.
  2. repec:fth:harver:1473 is not listed on IDEAS
  3. Movshuk, Oleksandr, 2004. "Restructuring, productivity and technical efficiency in China's iron and steel industry, 1988-2000," Journal of Asian Economics, Elsevier, vol. 15(1), pages 135-151, February.
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Cited by:
  1. Maurice CATIN & Christophe VAN HUFFEL, 2008. "Clusters Et Stratégies De Développement En Chine," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 28, pages 39-60.

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