Technology Import and Biased Technological Progress in Transforming Economies: Evidence From China

Shangze Dai, James Ji and Haichao Yu

Review of Development Economics, 2026, vol. 30, issue 2, 1194-1214

Abstract: Transforming economies increasingly face demographic headwinds and slowing capital accumulation and turn to technology imports from developed countries as an important strategy for bolstering growth. However, the effectiveness of this strategy depends on the direction of the technological bias it induces; labor‐saving progress can offset a shrinking workforce, while capital‐saving progress can alleviate investment slowdowns. Using a panel dataset of 282 Chinese cities from 2010 to 2019, we employ panel fixed‐effects, threshold, and spatial econometric models. We find three key results. First, technology import significantly promotes labor‐saving technological progress, suggesting that rising local labor costs dominate technological innovation. Second, this labor‐saving effect is heterogeneous, growing stronger in regions with a higher development stage, more advanced factor endowments, and higher knowledge production efficiency. Third, technology import creates negative spatial spillovers, inducing a capital‐saving bias in neighboring regions. These findings suggest that disruptions to global technology flows may hinder the ability of transforming economies to address the challenges of population aging.

Date: 2026
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