Indigenous and foreign innovation efforts and drivers of technological upgrading: evidence from China

Xiaolan Fu, Yundan Gong

Research output: Contribution to journalArticle

Abstract

This paper explores the role of indigenous and foreign innovation efforts in technological upgrading in developing countries, taking into account sectoral specificities in technical change. Using a Chinese firm-level panel dataset covering 2001–05, the paper decomposes productivity growth into technical change and efficiency improvement and examines the impact of indigenous and foreign innovation efforts on these changes. Indigenous firms are found to be the leading force on the technological frontier in the low- and medium-technology industries, while foreign-invested firms enjoy a clear lead in the high-technology sector. Collective indigenous R&D activities at the industry level are found to be the major driver of technology upgrading of indigenous firms that push out the technology frontier. While foreign investment appears to contribute to static industry capabilities, R&D activities of foreign-invested
firms have exerted a significant negative effect on the technical change of local firms over the sample period.
Original languageEnglish
Pages (from-to)1213-1225
Number of pages13
JournalWorld Development
Volume39
Issue number7
DOIs
Publication statusPublished - Jul 2011

Keywords

  • indigenous innovation
  • technology transfer
  • FDI
  • China
  • technology upgrading

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