This paper analyzes the impact of Research and Development (R&D) on the productivity of China's high technology industry. In order to capture important differences in the effect of R&D on output that arise from geographic and socioeconomic differences across three major regions in China, we use a novel semiparametric approach that allows us to model heterogeneities across provinces and time. Using a unique provincial level panel dataset spanning the period 2000–2007, we find that the impact of R&D on output varies substantially in terms of magnitude and significance across different regions. Results show that the eastern region benefits the most from R&D investments, however it benefits the least from technical progress, while the western region benefits the least from R&D investments, but enjoys the highest benefits from technical progress. The central region benefits from R&D investments more than the western region and benefits from technical progress more than the eastern region. Our results suggest that R&D investments would significantly increase output in both the eastern and central regions, however technical progress in the central region may further compound the effects of R&D on output within the region.
Bibliographical noteNOTICE: this is the author’s version of a work that was accepted for publication in Technological forecasting and social change. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Zhang, R, Sun, K, Delgado, MS & Kumbhakar, S, 'Productivity in China's high technology industry: regional heterogeneity and R&D' Technological forecasting and social change, vol. 79, no. 1 (2012) DOI http://dx.doi.org/10.1016/j.techfore.2011.08.005
- research and development
- Semiparametric smooth coefficient model