An Analysis of the Impact of International R&D Spillovers and Technology Innovation in China

Abstract

To test the impact of international R&D spillovers on China’s technological innovation, we collect and use province-country-level data from 23 provinces from 2001 to 2020 to fill a measurement gap of international R&D spillovers, so that our measurement can avoid ‘aggregation bias’ unlike the calculation methods in previous studies. We find that imports act as an effective international R&D spillover channel for improving technological innovation. Meanwhile, international R&D spillover through inward FDI and imports positively promotes China’s innovation performance. It suggests to policymakers that continuing to open up the economy and attract high-quality inward FDI is still required. Moreover, our results confirm that the eastern region enjoys a more significant international R&D spillover effect because of a more effective innovation environment. Hence, we suggest that given the inherent short board in the central and western regions, preferential policies to make up for this short board should be proposed to improve the innovation environment in the inland regions so as to enjoy a more significant international R&D spillover effect. Finally, we also observe that different periods of economic growth and the development levels of source countries also result in heterogeneous innovation impacts of international R&D spillover effects.