China: From Imitator to Innovator?

61 Pages Posted: 4 Oct 2016 Last revised: 6 Aug 2019

See all articles by Feng Zhan

Feng Zhan

University of Western Ontario

Juliane Proelss

Concordia University, Quebec; Trier University of Applied Sciences

Denis Schweizer

Concordia University

Date Written: August 5, 2019

Abstract

We examine the effects of that government policy change and assess how it has impacted firm innovation. To address potential endogeneity concerns, we use the policy change as a quasi-natural experiment and explain the exogenously caused variations. We also use a “difference-in-differences” approach to compare innovative activities of Chinese firm with that of matched U.S. peers, and find that the policy change had a positive effect on Chinese firms’ research spending, as measured by research intensity. We also show that Chinese firms increased their research spending in response to the strategic shift by the government after 2008, relatively outpacing their U.S. peers during the same time period. However, Chinese companies have not yet overtaken their U.S. peers. Rather, they have reduced the gaps between them.

Keywords: China, Innovation, Patents, R&D, Research Intensity

JEL Classification: G28, G30, O31, O32, P31, P34

Suggested Citation

Zhan, Feng and Proelss, Juliane and Schweizer, Denis, China: From Imitator to Innovator? (August 5, 2019). Emerging Markets Review, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2846428 or http://dx.doi.org/10.2139/ssrn.2846428

Feng Zhan

University of Western Ontario ( email )

1151 Richmond Street
London, Ontario N6A 5B8
Canada

Juliane Proelss

Concordia University, Quebec ( email )

1455 de Maisonneuve Blvd. W.
Montreal, Quebec H3G 1MB
Canada

Trier University of Applied Sciences ( email )

Scheidershof
Trier, 54293
Germany

Denis Schweizer (Contact Author)

Concordia University ( email )

1455 de Maisonneuve Blvd. W.
Montreal, Quebec H3G 1M8
Canada
+1 (514) 848-2424 ext. 2926 (Phone)
+1 (514) 848-4500 (Fax)

HOME PAGE: http://www.concordia.ca/jmsb/faculty/denis-schweizer.html

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