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

Ganeshan Wignaraja

Journal of Asian Economics, 2012, vol. 23, issue 3, 224-233

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.

Keywords: Innovation; Technological capabilities; R&D; Exports; China (search for similar items in EconPapers)
JEL-codes: F23 L63 O31 O32 O57 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (12)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:asieco:v:23:y:2012:i:3:p:224-233

DOI: 10.1016/j.asieco.2011.02.001

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