Regional technology development path in an open developing economy: evidence from China

Abstract

This article explores the paths of regional technology development in a large open developing economy. Findings from the research based on Chinese data suggest a differentiated approach to regional technology development. In technologically advanced regions, indigenous R&D plays a more important role than learning-by-doing while in backward regions the latter becomes more important. Interregional technology transfer is found to have a more significant impact on regional technology development than Foreign Direct Investment (FDI) and its effect intensifies when the technology level of the recipient region is close to the technological frontier. R&D plays a key role in both the assimilation of foreign technologies in advanced regions and the assimilation of interregional technology transfer; learning-by-doing only affects the latter.

Keywords:

• technology transfer
• learning-by-doing
• FDI
• regional technology development

JEL Classification::

• D24
• F21
• O3
• O1

Notes

¹ Eden et al. (1997) conclude that there are four ways in which technology transfer from FDI to the host can occur: (i) domestic enterprises copy or imitate technology and management mechanisms of foreign enterprises, (ii) develop upstream or downstream associations with foreign firms, (iii) employ personnel that have been trained by the latter, or (iv) they compete with foreign enterprises in the market.

² Some authors do not agree with this perspective. For instance, Kokko et al. (1997) finds positive and significant spillover effects only when the technological gap is moderate or small.

³ When calculating TFP, we do not subtract R&D stock from K, that is, it is the capital stock in general meaning.