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Research on the Dynamic Interrelationship among R&D Investment, Technological Innovation, and Economic Growth in China

Author

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  • Chao Liu

    (Business School, Hohai University, Nanjing 211100, China)

  • Guanjun Xia

    (Business School, Hohai University, Nanjing 211100, China)

Abstract

Technological innovation is an important driving force for a country’s sustainable economic development and social progress, and can be achieved through R&D investment, which would lead to sustainable economic growth. This process is one of the important steps for China to realize the transformation of the economic growth mode and the development from extensive to intensive type. Since R&D investment, technological innovation, and economic growth are mutually influential and inseparable, it is particularly important to understand the interrelationship between the three. By collating data from China from 1995 to 2016, this paper established an indicator system of R&D investment, technological innovation, and economic growth as research variables. Vector autoregression model, impulse response function, and variance decomposition function were adopted. A long-term stable dynamic interrelationship among the three was revealed. The empirical analysis showed that in recent years, the growth of R&D investment, technological innovation, and economic growth stagnated or even slowly declined, which indicated that the economic development had insufficient stamina. The conversion efficiency of R&D investment was not high, and R&D investment for short-term profit was ubiquitous. The innovation ability of scientific and technological achievements was not strong, the conversion rate of scientific and technological achievements was not high, and the market integration process was relatively slow. Overall, a good circular mechanism has not been established among R&D investment, technological innovation, and economic growth. Based on this, China should improve the mutual influence and interrelationship among R&D investment, technological innovation, and economic growth. The transmission mechanism among the three should be optimized and stable economic growth promoted, for example, by increasing R&D investment, enhancing the efficiency of R&D funds, improving the incentive system for scientific and technological innovation, and promting the effective use and marketization integration of innovation achievements.

Suggested Citation

  • Chao Liu & Guanjun Xia, 2018. "Research on the Dynamic Interrelationship among R&D Investment, Technological Innovation, and Economic Growth in China," Sustainability, MDPI, vol. 10(11), pages 1-19, November.
    • Handle: RePEc:gam:jsusta:v:10:y:2018:i:11:p:4260-:d:183701
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    References listed on IDEAS

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    5. Sun, Helin & Cappa, Francesco & Zhu, Jia & Peruffo, Enzo, 2023. "The effect of CEO social capital, CEO duality and state-ownership on corporate innovation," International Review of Financial Analysis, Elsevier, vol. 87(C).
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    7. Aurel Burciu & Rozalia Kicsi & Ionel Bostan & Iulian Condratov & Cristian Valentin Hapenciuc, 2020. "Sustainable Economic Growth Based on R&D Amplification and Technological Content of Exports. Evidences from Romania and The V4 Economies," Sustainability, MDPI, vol. 12(5), pages 1-17, February.
    8. Cui, Yu & Khan, Sufyan Ullah & Li, Zhixue & Zhao, Minjuan, 2021. "Environmental effect, price subsidy and financial performance: Evidence from Chinese new energy enterprises," Energy Policy, Elsevier, vol. 149(C).
    9. Leonard Lam, Fong Litt & Law, Siong Hook & Azman-Saini, W. N. W. & Khair-Afham, M. S. M. & Goh, Lim Thye, 2022. "High Technology Trade, Innovation and Economic Growth: Evidence from Aggregate and Disaggregate Trade Products," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 56(1), pages 15-31.
    10. Wang, Yanjun & Li, Yongfang, 2023. "Chinese economic growth and sustainable development: Role of artificial intelligence and natural resource management," Resources Policy, Elsevier, vol. 85(PB).
    11. Yanhong Liu & Xinjian Huang & Weiliang Chen, 2019. "The Dynamic Effect of High-Tech Industries’ R&D Investment on Energy Consumption," Sustainability, MDPI, vol. 11(15), pages 1-23, July.
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    13. Longwu Liang & Zhen Bo Wang & Dong Luo & Ying Wei & Jingwen Sun, 2020. "Synergy effects and it’s influencing factors of China’s high technological innovation and regional economy," PLOS ONE, Public Library of Science, vol. 15(5), pages 1-25, May.
    14. Wang, Wei & Xiao, Weiwei & Bai, Caiquan, 2022. "Can renewable energy technology innovation alleviate energy poverty? Perspective from the marketization level," Technology in Society, Elsevier, vol. 68(C).
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    16. Chuanyi Wang & Jiale Yang & Zhe Cheng & Chaoqun Ni, 2019. "Postgraduate Education of Board Members and R&D Investment—Evidence from China," Sustainability, MDPI, vol. 11(22), pages 1-17, November.

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