R&D and Economic Growth in China on the Basis of Data Envelopment Analysis

Purpose This paper aims to explore the research and development (R&D) structure and the effect which R&D may have on economic growth in Hebei Province, PRC. Through the comparison of R&D efficiency in Hebei and that of seven other regions (with top economic performance in China), it tries to find out the right ways of improving R&D performance, in order to increase its contribution to economic growth. It concludes with practical suggestions for future R&D management in Hebei, and it also offers a useful evaluation framework for other regions. Design/methodology/approach Based on the analysis of R&D census in 2000 in China and an investigation of 532 large and medium enterprises in Hebei Province, this paper presents a data envelopment analysis (DEA) framework to measure the effects of R&D on economic growth in China. Regional comparisons of R&D efficiencies are also carried out. Findings Applying the DEA model, this paper finds out the shortcomings of R&D structure in Hebei Province as well as problems in R&D efficiency compared to some other regions. The R&D scale of Hebei is still at the stage of increasing returns to scale, and its ratio of basic research: applied research: development should be adjusted to 2.9:10.4:86.7 instead of 5.7:2.6:67.6. Through the investigation of 532 large and medium enterprises between 1998 and 2000 in Hebei, it was also found that the indigenous innovation is currently the main pattern of Hebei's enterprises. Originality/value With the DEA model, this paper presents a useful evaluation model on R&D structure and contribution to economic growth in Hebei Province, PRC. A comparison of regional R&D efficiencies provides an important guideline for local governments with respect to future policy making. The framework used in Hebei Province in this paper offers a good reference for some other regions as well