Technological spillovers and industrial growth in Chinese regions

Using a new data set on regional inputs and outputs, this paper focuses on the role of interregional technology spillovers in the process of industrial growth in Chinese regions from 1990 till 2005. Inflows of foreign direct investment (FDI) increase rapidly between 1990 and 1998 and after 2001. Domestic capital investment increases even more rapidly than FDI, resulting in declining FDI intensity from 1995 onward. Domestic research and development (R&D) investment accelerates after 1998. Regional industrial growth benefits from interregional R&D spillovers. From 1998 onward, it also benefits from international FDI spillovers. Interestingly, FDI in a region has a negative impact on the growth of industrial output in neighboring regions.