State‐owned industrial enterprises' non‐R&D innovation and regional total factor productivity: An analysis based on the panel co‐integration method

Abstract

State‐owned industrial enterprises' (SOIEs') non‐R&D innovation activities have been ignored by scholars. Using panel data on the regions of China, this paper examines the impact of non‐R&D innovation by SOIEs on regional total factor productivity (TFP) with panel Co‐integration and a panel vector error correction (VEC) model. The results show that SOIEs' non‐R&D innovation is important for economic growth, and different types of non‐R&D innovations have heterogeneous effects on regional TFP. Foreign technology acquisition (FTA) has more positive long‐term and short‐term impacts on regional TFP than do R&D expenditures. Technology assimilation (TA) improves regional TFP, but the effect of R&D expenditures on innovation is higher than that of TA in the eastern region. Domestic technology purchases (DTPs) have no significant impact on regional TFP in the central and western regions and even have a negative effect in the eastern region. Technology transformation (TT) has a stronger long‐term positive effect on regional TFP than R&D expenditures, but R&D innovation has a stronger short‐term positive effect than TT. We examine the impact of SOIEs' non‐R&D innovation on regional economic efficiency and, to a degree, identify the source of its effect on innovation. This study emphasizes the critical function of technology diffusion in fostering economic efficiency.