An Empirical Study on the Effects of International Technology Diffusion on Chinese Regional Technology Progress

Technology progress has been key for sustaining economic growth in China. This paper modifies CH model to test the effects of international technology diffusion on Chinese eastern, middle and western technology progress. Two additional channels, inward FDI and foreign patent applications, for international technology diffusion are estimated along with the channel of trade. We construct a new approach to qualify R&D stock embodied in patent applications and estimate the spillover effects on Chinese 29 provinces from 1985 to 2003, implying that technology diffusion is important for Chinese technology progress, especially on middle and western regions. Each channel for international technology diffusion has distinct effects on technology progress in different regions. The differences between the elasticities of regional technology progress with respect to each channel for international technology diffusion can affect Chinese regional policymaking to promote technology progress