The dynamics of China’s expenditure on R&D

LI Ping, YU Guocai

PDF(399 KB)
PDF(399 KB)
Front. Econ. China ›› 2009, Vol. 4 ›› Issue (1) : 97-109. DOI: 10.1007/s11459-009-0006-3
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The dynamics of China’s expenditure on R&D

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Abstract

R&D investment is enterprises’ strategy based on the market demand on innovative products and its production capacity for them. Enlarging market demand would spur the enterprises’ R&D input and the enhancement of technology state in production ability could have a complex effect on less developed countries’ R&D expenditure. With the measurement of China’s technology state compared to the United States and Japan, this paper explores with the state space model the dynamic effects of determinants on China’s R&D expenditure with the data during 1987–2006. The result illustrates that the growing national income, a proxy of domestic market demand, impedes the further R&D investment in China due to the enormous demand for necessities dominated by lower income class, and the income inequality is the major incentive for R&D investment via the higher pricing on the wealthy group, and that the improvement of technology state reduces the innovation risk and plays an important role in stimulating R&D expenditure.

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R&D / effective demand / technology state / state space model

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LI Ping, YU Guocai. The dynamics of China’s expenditure on R&D. Front Econ Chin, 2009, 4(1): 97‒109 https://doi.org/10.1007/s11459-009-0006-3

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2014 Higher Education Press and Brill
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