Technology imports, product exports and firms’ R&D investment: an empirical analysis of firms in the Chinese high technology sector

Abstract

New trade theory emphasises the important role that international trade plays in advancing technologies. This study examines the impact of international trade on firm research and development investment (RDI). Specifically, it analyses the impact of technology imports and product exports respectively on firm RDI in the high technology sector of China. The hypotheses are tested against 1111 firms in the high technology sector in Zhejiang province. Neither technology imports nor product exports have a positive impact on firm RDI at an aggregated level. However, disembodied technology imports have a significant positive impact on firm RDI, while non-high technology product exports show a significant negative impact.

Notes

1. The statistics of technology imports in 1980 are drawn from Jin et al. (2008); the statistics of technology imports come from the Department of Service Trade, Ministry of Commerce (2008); the statistics of product exports come from the National Bureau of Statistics Commission and SSB (2008).

2. 3Zis – The following three types of enterprise are categorised as 3Zis. (Zi means capitals): foreign direct invested enterprises, foreign joint ventures and Sino-foreign collaborative enterprises.

3. The sales volumes for the non-responses in 2005 were obtained from DSTZJ, which reported the sales volumes of all 1718 firms.

4. In this study, consideration of the impact of industrial sectors on firm R&D investment was excluded. There are two reasons. First, the distribution of firms across the sectors is quite unbalanced, with only a small number of firms in some sectors. For example, there are only 22 firms in the New Energy sector, while there are 532 firms in the Electronic Machinery and Equipment sector. Second, all firms surveyed are in a high technology sector, which suggests a high level of homogeneity.