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Effects of knowledge capital on total factor productivity in China: A spatial econometric perspective

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  • Scherngell, Thomas
  • Borowiecki, Martin
  • Hu, Yuanjia

Abstract

The transformation of China into a knowledge based economy is one of the most intensively debated research issues in Economic Geography. The focus of this study is on effects of knowledge capital on manufacturing total factor productivity (TFP) in China through the lens of the regional knowledge capital model (KCM). The objective is to estimate the impact of region-internal and region-external knowledge capital — measured in terms of patents granted by the Chinese patent office — on TFP across Chinese regions. We derive a Spatial Durbin Model (SDM) for empirical testing, using panel data on 29 Chinese regions for the years 1988–2007. The results indeed point to a shift of Chinese productivity growth to a more knowledge based one, statistically confirming the impact of knowledge capital on regional TFP after 1998. Furthermore, this shift is not only based on region-internal knowledge capital, but also on inter-regional knowledge spillovers.

Suggested Citation

  • Scherngell, Thomas & Borowiecki, Martin & Hu, Yuanjia, 2014. "Effects of knowledge capital on total factor productivity in China: A spatial econometric perspective," China Economic Review, Elsevier, vol. 29(C), pages 82-94.
    • Handle: RePEc:eee:chieco:v:29:y:2014:i:c:p:82-94
    DOI: 10.1016/j.chieco.2014.03.003
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    More about this item

    Keywords

    China; Regional total factor productivity; Knowledge capital; Spatial Durbin Model;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • O49 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Other
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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