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R&D Performance in Chinese industry


  • Gary Jefferson
  • Bai Huamao
  • Guan Xiaojing
  • Yu Xiaoyun


This research, which investigates a set of fundamental relationships in the R&D literature, is based on an unusually rich set of panel data covering the population of China's large and medium-size manufacturing enterprises. Using a recursive three-equation system, we investigate the determinants of firm-level R&D intensity, the process of knowledge production, and the impact of innovation on firm performance. Several results stand out. Overall, the statistical relationships within the model are surprisingly robust, including the contributions of R&D expenditure to new product (NP) innovation, productivity, and profitability. The roles of firm size, market concentration, and profitability in driving R&D effort parallel to those found in the US literature. We find that new product (NP) innovation accounts for approximately 12% of the total returns to R&D. Also, returns to industrial R&D in China appear to be at least three to four times the returns to fixed production assets.

Suggested Citation

  • Gary Jefferson & Bai Huamao & Guan Xiaojing & Yu Xiaoyun, 2006. "R&D Performance in Chinese industry," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 15(4-5), pages 345-366.
  • Handle: RePEc:taf:ecinnt:v:15:y:2006:i:4-5:p:345-366 DOI: 10.1080/10438590500512851

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    References listed on IDEAS

    1. Cohen, Wesley M. & Levin, Richard C., 1989. "Empirical studies of innovation and market structure," Handbook of Industrial Organization,in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 2, chapter 18, pages 1059-1107 Elsevier.
    2. Cohen, Wesley M & Klepper, Steven, 1996. "A Reprise of Size and R&D," Economic Journal, Royal Economic Society, vol. 106(437), pages 925-951, July.
    3. Jefferson, Gary H. & Rawski, Thomas G. & Li, Wang & Yuxin, Zheng, 2000. "Ownership, Productivity Change, and Financial Performance in Chinese Industry," Journal of Comparative Economics, Elsevier, vol. 28(4), pages 786-813, December.
    4. John Scott, 1984. "Firm versus Industry Variability in R&D Intensity," NBER Chapters,in: R&D, Patents, and Productivity, pages 233-248 National Bureau of Economic Research, Inc.
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    More about this item


    Innovation; R&D; Chinese industry; Productivity;


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