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Innovation, learning, and exporting in China: Does R&D or a technology index matter?

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  • Wignaraja, Ganeshan

Abstract

This paper undertakes econometric analysis of innovation, learning, and exporting in automobiles and electronics firms in China using a large-scale 2003 dataset to identify the most appropriate innovation proxy. Drawing on recent literature on innovation and learning in developing countries, it tests two alternative proxies: (i) a technology index (TI) to capture a variety of minor activities involved in using imported technologies efficiently; and (ii) the research and development (R&D)-to-sales ratio, which represents formal technological efforts to create new products and processes, often at world frontiers. A higher TI increases the probability of exporting in both industries, while the R&D-to-sales ratio was not significant. Foreign ownership, technical manpower, and the characteristics of the general manager/chief executive officer also matter. The findings suggest that China's remarkable success in the export of automobiles and electronics since initiating an open-door foreign direct investment (FDI) policy in 1978 is linked to technology transfer from multinationals; systematic investments in and upgrading of minor technological activities (like search, engineering, quality management and design); and human capital. As China's per capita income rises over time, however, formal R&D activities are likely to become more important to sustain competitiveness and technological upgrading in automobiles and electronics.

Suggested Citation

  • Wignaraja, Ganeshan, 2012. "Innovation, learning, and exporting in China: Does R&D or a technology index matter?," Journal of Asian Economics, Elsevier, vol. 23(3), pages 224-233.
  • Handle: RePEc:eee:asieco:v:23:y:2012:i:3:p:224-233
    DOI: 10.1016/j.asieco.2011.02.001
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Ganeshan Wignaraja, 2013. "Understanding Innovation in Production Networks in East Asia," Trade Working Papers 23395, East Asian Bureau of Economic Research.
    2. Felix Groba & Jing Cao, 2015. "Chinese Renewable Energy Technology Exports: The Role of Policy, Innovation and Markets," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 60(2), pages 243-283, February.
    3. Ganeshan Wignaraja, 2015. "Factors Affecting Entry into Supply Chain Trade: An Analysis of Firms in Southeast Asia," Asia and the Pacific Policy Studies, Wiley Blackwell, vol. 2(3), pages 623-642, September.
    4. Felix Groba & Jing Cao, 2015. "Chinese Renewable Energy Technology Exports: The Role of Policy, Innovation and Markets," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 60(2), pages 243-283, February.
    5. Ganeshan Wignaraja, 2014. "Joining the supply chain: a firm-level perspective," Chapters,in: A World Trade Organization for the 21st Century, chapter 4, pages 71-109 Edward Elgar Publishing.
    6. Tomohiro Machikita & Yasushi Ueki, 2015. "Measuring and Explaining Innovative Capability: Evidence from Southeast Asia," Asian Economic Policy Review, Japan Center for Economic Research, vol. 10(1), pages 152-173, January.
    7. Ganeshan Wignaraja, 2015. "Comment on “Measuring and Explaining Innovative Capability: Evidence from Southeast Asia”," Asian Economic Policy Review, Japan Center for Economic Research, vol. 10(1), pages 174-175, January.

    More about this item

    Keywords

    Innovation; Technological capabilities; R&D; Exports; China;

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • L63 - Industrial Organization - - Industry Studies: Manufacturing - - - Microelectronics; Computers; Communications Equipment
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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