Knowledge spillovers,absorptive capacity and total factor productivity in China’s manufacturing firms |
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Authors: | Hailin Liao Xiaohui Liu Chengang Wang |
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Institution: | 1. School of Business and Economics , Loughborough University , UK;2. School of Management , University of Bradford , UK |
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Abstract: | Applying the stochastic frontier framework, this study explores the diffusion and absorption of technological knowledge in China’s manufacturing firms, based on a panel of more than 10,000 local and foreign-invested firms over the period 1998–2001. Our empirical approach allows us to distinguish between technological progress (TP) and technical efficiency (TE) in analysing whether R&D, exports and the presence of foreign direct investment simultaneously enhance TP through knowledge spillovers in a single framework and whether different types of domestic absorptive capacity moderate external knowledge spillovers in relation to TE. The results show that there are positive inter-industry productivity spillovers from R&D and foreign presence, whereas evidence of intra-industry productivity spillovers from FDI to Chinese firms is less robust. We find evidence that absorptive capacity is one of the key determinants to quantitatively explain intra-industry differences in productivity of local Chinese firms. The findings have important policy implications. |
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Keywords: | knowledge spillovers R& D stochastic frontier absorptive capacity China |
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