Technological spillovers and industrial growth in Chinese regions

Lili Wang, Huub Meijers & Adam Szirmai


This paper focuses on the role of interregional technology spillovers in the process of industrial growth in Chinese regions in the period 1990-2005. Inflows of FDI increased rapidly from 1990 till 1998, slowing down thereafter. Domestic R&D investment accelerated after 1998. Regional industrial growth benefits from both interregional R&D spillovers and after 1998 from international FDI spillovers. However, in contrast to R&D spillovers, FDI spillovers contribute conditionally, mainly in areas where local R&D stocks are high enough. Interestingly, indirect interregional FDI spillover effects are negative. Foreign investment in one region attracts resources from regions with less FDI, thus having a negative influence on growth of industrial output in neighbouring regions.

Keywords: Technological spillovers; Interregional spillovers; R&D; Foreign direct investment; Industrial growth; Chinese industry

JEL Classification: F43, O14, O33, R11, R12