Productivity spillovers from R&D, exports and FDI in China's manufacturing sector
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Productivity spillovers from R&D, exports and FDI in China’s manufacturing sector Y Wei1,2 and X Liu3 1 International Business Research Group, Department of Economics, Management School, Lancaster University, UK; 2College of Economics and Trade, Hunan University, China; 3School of Management, University of Surrey, Guildford, UK
Correspondence: Yingqi Wei, International Business Research Group, Department of Economics, Management School, Lancaster University, Room B40, Bailrigg, Lancaster LA1 4YX, UK. Tel: þ 44 01524 593178; Fax: þ 44 01524 594244; E-mail: [email protected]
Received: 12 December 2003 Revised: 5 May 2005 Accepted: 12 October 2005 Online publication date: 18 May 2006
Abstract This paper assesses productivity spillovers from R&D, exports and the very presence of foreign direct investment (FDI) in China’s manufacturing sector, based on a panel of more than 10,000 indigenous and foreign-invested firms for 1998–2001. There are positive inter-industry productivity spillovers from R&D and exports, and positive intra- and inter-industry productivity spillovers from foreign presence to indigenous Chinese firms within regions. OECDinvested firms seem to play a much greater role in inter-industry spillovers than overseas Chinese firms from Hong Kong, Macao and Taiwan within regions. The findings have important managerial and policy implications. Journal of International Business Studies (2006), 37, 544–557. doi:10.1057/palgrave.jibs.8400209 Keywords: R&D; exports; FDI; productivity spillovers; China
Introduction Recent endogenous growth theory suggests that technological knowledge has an important influence on a country’s productivity, and is the main driving force of economic growth. Knowledge can be generated by an organisation’s own research and development (R&D). Given its non-rivalrous nature, knowledge also spills via various channels, including R&D, international trade and foreign direct investment (FDI). There are respective strands of literature on knowledge spillovers from R&D, international trade and FDI, but few studies examine these channels within a single framework. There are several studies on spillovers generated by FDI in China, including Li et al. (2001), Liu et al. (2001), Wei and Liu (2001), Buckley et al. (2002), Hu and Jefferson (2002), Liu (2002), and Huang (2004). There is only one study of domestic R&D spillovers, that is, Jefferson et al. (2006). No study, to our best knowledge, is on export spillovers. As for productivity spillovers from FDI, various alternative measures of foreign presence have been applied in the literature, including capital, employment, R&D, exports, sales and output. However, there is no wide recognition that each of these indicators may capture a different aspect of spillover effects. This may partially explain why mixed results have been produced in the ¨ rg and literature. (For surveys of the empirical literature, see Go ¨ rg and Greenaway (2004).) Strobl (2001)
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