The Shape of Ideas Production Function in Transition and Developing Economies: Evidence from China

This article contributes to the empirical understanding of ideas production in transition and developing economies from an international knowledge spillover perspective. Based on an extended form of the ideas production function of a nonscale endogenous growth model, the article estimates the shape of the Chinese ideas production function using a time-series pattern of Chinese patenting. While the empirical results corroborate recent findings on the shape of the ideas production function for Organization for Economic Cooperation and Development economies, the estimate also captures the positive evidence of foreign knowledge spillovers in the domestic production of new-to-China ideas. This evidence is important since it has empirically proved the possibility for the technological latecomer to grow depending on spillovers of the pioneer research and development (R&D). It also implies that Chinese R&D productivity growth depends on the simultaneous expansion of the domestic R&D-producing sector as well as the foreign knowledge stock in the Chinese market.