Knowledge spillovers, absorptive capacity and total factor productivity in China's manufacturing firms

Hailin Liao, Xiaohui Liu, Chengang Wang

Research output: Contribution to journalArticle

13 Citations (Scopus)

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.

Original languageEnglish
Pages (from-to)533-547
Number of pages15
JournalInternational Review of Applied Economics
Volume26
Issue number4
Early online date21 Nov 2011
DOIs
Publication statusPublished - Jul 2012
Externally publishedYes

Fingerprint

Manufacturing firms
Total factor productivity
Industry
Knowledge spillovers
Absorptive capacity
China
Chinese firms
Technical efficiency
Technological progress
Productivity spillovers
Foreign direct investment
Policy implications
Stochastic frontier
Productivity
Technological knowledge

Keywords

  • absorptive capacity
  • China
  • knowledge spillovers
  • R&D
  • stochastic frontier

ASJC Scopus subject areas

  • Economics and Econometrics

Cite this

Knowledge spillovers, absorptive capacity and total factor productivity in China's manufacturing firms. / Liao, Hailin; Liu, Xiaohui; Wang, Chengang.

In: International Review of Applied Economics, Vol. 26, No. 4, 07.2012, p. 533-547.

Research output: Contribution to journalArticle

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