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R&D, Human Capital Investment and Productivity: Firm-level Evidence from China's Electronics Industry


  • Chih-Hai Yang
  • Chun-Hung Lin
  • Daw Ma


Using firm-level panel data covering 2005-2007, the present paper examines the effects of R&D and human capital investment on productivity in China's electronics industry. It is found that both R&D and on-the-job training positively contribute to total factor productivity (TFP). Firms' investment in employees' health insurance and pensions, which are components of workers' compensation, generate a productivity-enhancing effect, supporting the efficiency wage hypothesis. The estimated impact of R&D on productivity varies among different forms of ownership, and foreign-owned enterprises experience higher R&D efficiency than state or private enterprises. After controlling for potential endogenous causality between TFP and R&D, the above findings remain unchanged. We also find that on-the-job training can improve the quality of human capital and is helpful in promoting productivity. Therefore, establishing indigenous technological capability through various technological sources is quite important, and the government should devote further effort to investing in human capital. Copyright (c) 2010 The Authors China & World Economy (c) 2010 Institute of World Economics and Politics, Chinese Academy of Social Sciences.

Suggested Citation

  • Chih-Hai Yang & Chun-Hung Lin & Daw Ma, 2010. "R&D, Human Capital Investment and Productivity: Firm-level Evidence from China's Electronics Industry," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 18(5), pages 72-89.
  • Handle: RePEc:bla:chinae:v:18:y:2010:i:5:p:72-89

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    References listed on IDEAS

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    Cited by:

    1. Yang, Chih-Hai & Lin, Hui-Lin & Li, Hsiao-Yun, 2013. "Influences of production and R&D agglomeration on productivity: Evidence from Chinese electronics firms," China Economic Review, Elsevier, vol. 27(C), pages 162-178.
    2. Yang, Chih-Hai & Tsou, Meng-Wen, 2015. "Multinational exposure, export variety and price: Evidence from Chinese electronics exporters," Journal of the Japanese and International Economies, Elsevier, vol. 38(C), pages 93-110.
    3. Sun, Sizhong & Anwar, Sajid, 2015. "R&D status and the performance of domestic firms in China's coal mining industry," Energy Policy, Elsevier, vol. 79(C), pages 99-103.

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