ChinHow R&D Investments Influence TFP Growth: Evidence from China’s Large and Medium- Sized Industrial Enterprises

Liqun Zhou () and Liangke Xia
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Liqun Zhou: Nankai Institute of Economics, Nankai University, Tinajin 300071, China
Liangke Xia: Nankai Institute of Economics, Nankai University, Tinajin 300071, China

Frontiers of Economics in China-Selected Publications from Chinese Universities, 2010, vol. 5, issue 4, 537-558

Abstract: This paper investigates the potential channels through which R&D may influence TFP growth using industry-level panel data of China’s large and medium-sized industrial enterprises over the period of 2000–2007. Comparing with existing literature, we provide a closer look of the relationship between R&D and TFP growth by decomposing TFP growth into efficiency change and technical change components using Malmquist productivity index and distinguishing between upstream R&D spillovers and downstream R&D spillovers. We find TFP grow slightly during 2000–2007, and R&D investment indeed serves as an engine of productivity growth just as endogenous growth theories argued, which is largely because R&D accelerates technical progress even it also results in enlarging technical inefficiency. However, we find a robust negative effect of downstream R&D spillovers on TFP growth, the effects of upstream is positive but not statistically significant. In addition, we do not find the positive effects of human capital on TFP as endogenous growth theories indicated, but find human capital severs as “assimilation device” for R&D spillovers both in promoting TFP growth and increasing technical efficiency even the effects on technical progress is adverse.

Keywords: R&D investment; human capital; TFP growth; Malmquist produc- tivity index (search for similar items in EconPapers)
JEL-codes: D24 O31 O32 (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:fec:journl:v:5:y:2010:i:4:p:537-558

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