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ChinHow R&D Investments Influence TFP Growth: Evidence from China’s Large and Medium- Sized Industrial Enterprises

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  • Liqun Zhou

    (Nankai Institute of Economics, Nankai University, Tinajin 300071, China)

  • Liangke Xia

    (Nankai Institute of Economics, Nankai University, Tinajin 300071, China)

Abstract

This paper investigates the potential channels through which R&D may influence TFP growth using industry-level panel data of China’s large and medium-sized industrial enterprises over the period of 2000–2007. Comparing with existing literature, we provide a closer look of the relationship between R&D and TFP growth by decomposing TFP growth into efficiency change and technical change components using Malmquist productivity index and distinguishing between upstream R&D spillovers and downstream R&D spillovers. We find TFP grow slightly during 2000–2007, and R&D investment indeed serves as an engine of productivity growth just as endogenous growth theories argued, which is largely because R&D accelerates technical progress even it also results in enlarging technical inefficiency. However, we find a robust negative effect of downstream R&D spillovers on TFP growth, the effects of upstream is positive but not statistically significant. In addition, we do not find the positive effects of human capital on TFP as endogenous growth theories indicated, but find human capital severs as “assimilation device” for R&D spillovers both in promoting TFP growth and increasing technical efficiency even the effects on technical progress is adverse.

Suggested Citation

  • Liqun Zhou & Liangke Xia, 2010. "ChinHow R&D Investments Influence TFP Growth: Evidence from China’s Large and Medium- Sized Industrial Enterprises," Frontiers of Economics in China-Selected Publications from Chinese Universities, Higher Education Press, vol. 5(4), pages 537-558, December.
    • Handle: RePEc:fec:journl:v:5:y:2010:i:4:p:537-558
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    File URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-010-0112-2
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    Cited by:

    1. Chen, Shiyi & Golley, Jane, 2014. "‘Green’ productivity growth in China's industrial economy," Energy Economics, Elsevier, vol. 44(C), pages 89-98.

    More about this item

    Keywords

    R&D investment; human capital; TFP growth; Malmquist produc- tivity index;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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