Innovation and technology transfer through global value chains: Evidence from China's PV industry

Abstract

China's success as a rapid innovation follower in the infant Photovoltaic (PV) industry surprised many observers. This paper explores how China inserted itself into global clean energy innovation systems by examining the case of the solar PV industry. The paper decomposes the global PV industrial value chain, and determines the main factors shaping PV technology transfer and diffusion. Chinese firms first entered PV module manufacturing through technology acquisition, and then gradually built their global competitiveness by utilizing a vertical integration strategy within segments of the industry as well as the broader PV value chain. The main drivers for PV technology transfer from the global innovation system to China are global market formation policy, international mobilization of talent, the flexibility of manufacturing in China, and belated policy incentives from China's government. The development trajectory of the PV industry in China indicates that innovation in cleaner energy technologies can occur through both global and national innovation processes, and knowledge exchange along the global PV value chain.