Abstract
This chapter aims at analyzing the impact of knowledge spillovers through external channels, namely FDI and trade on the regional innovation and upgrading in Guangdong province, China by using the panel data of 21 municipalities for the period of 2001–2012. The results show strong evidence of external knowledge spillover as effective trigger of local-scale knowledge spillover in the latecomer regions. The external knowledge spillover is primarily working through the mechanism of FDIs rather than import at the investigation period. Furthermore, it demonstrates that the impact of external knowledge spillover is moderated by the degree of industrial diversity at the city scale, which means that more diversified areas benefit from FDI and import to a greater extent. Overall, the empirical investigation suggests that external knowledge spillover is not an automatic process, but is rather closely related to the investment stock, the degree of embeddedness and the absorptive abilities of local firms in the long run. At the end, this chapter points out the future study should go further to explore microeconomic aspects of innovation at the firm-level.
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