The impact of R&D efficiency on economic growth in China: non-linear threshold effects
DOI: https://doi.org/10.3846/tede.2024.20166Abstract
This study uses a threshold estimation technique to examine whether the effect of R&D efficiency on economic growth in China differs according to the level of financial development. The results broadly confirm a nonlinear relationship between R&D efficiency and economic growth due to the dynamic and static threshold effects of financial development and R&D expenditure. This finding suggests that R&D efficiency does not significantly impact growth in the low and middle-financial development provinces at conventional levels. Hence, the benefit of R&D efficiency in China could stem from the positive effect of R&D in highly financially developed provinces. Though R&D efficiency is poor, R&D investment still enhances economic growth because the amount of R&D investment is enormous. This finding suggests that while it is most important to not unthinkingly expand R&D gross investment, it is also necessary to make full use of R&D investment by improving R&D efficiency.
First published online 29 May 2024
Keywords:
R&D efficiency, R&D investment, economic growth, SBM-DEA model, panel threshold model, dynamic panel threshold modelHow to Cite
Share
License
Copyright (c) 2024 The Author(s). Published by Vilnius Gediminas Technical University.
This work is licensed under a Creative Commons Attribution 4.0 International License.
References
Afzal, M. N. I. (2014). An empirical investigation of the National Innovation System (NIS) using Data Envelopment Analysis (DEA) and the TOBIT model. International Review of Applied Economics, 28(4), 507–523. https://doi.org/10.1080/02692171.2014.896880> https://doi.org/10.1080/02692171.2014.896880
Alvarez-Pelaez, M. J., & Groth, C. (2005). Too little or too much R&D? European Economic Review, 49(2), 437–456. https://doi.org/10.1016/S0014-2921(03)00045-X> https://doi.org/10.1016/S0014-2921(03)00045-X
Ang, J. B., & Madsen, J. B. (2011). Can second-generation endogenous growth models explain the productivity trends and knowledge production in the Asian miracle economies? The Review of Economics and Statistics, 93(4), 1360–1373. https://doi.org/10.1162/REST_a_00126> https://doi.org/10.1162/REST_a_00126
Bai, J. (2013). On regional innovation efficiency: Evidence from Panel data of China’s different provinces. Regional Studies, 47(5), 773–788. https://doi.org/10.1080/00343404.2011.591784> https://doi.org/10.1080/00343404.2011.591784
Baumann, J., & Kritikos, A. S. (2016). The link between R&D, innovation and productivity: Are micro firms different? Research Policy, 45(6), 1263–1274. https://doi.org/10.1016/j.respol.2016.03.008> https://doi.org/10.1016/j.respol.2016.03.008
Blanco, L. R., James, J. G., & Prieger, E. (2016). The impact of research and development on economic growth and productivity in the U.S. States. Southern Economic Journal, 82(3), 914–934. https://doi.org/10.1002/soej.12107> https://doi.org/10.1002/soej.12107
Bodman, P., & Le, T. (2013). Assessing the roles that absorptive capacity and economic distance play in the foreign direct investment-productivity growth nexus. Applied Economics, 45(8), 1027–1039. https://doi.org/10.1080/00036846.2011.613789> https://doi.org/10.1080/00036846.2011.613789
Celli, V., Cerqua, A., & Pellegrini, G. (2021). Does R&D expenditure boost economic growth in lagging regions? Social Indicators Research. https://doi.org/10.1007/s11205-021-02786-5> https://doi.org/10.1007/s11205-021-02786-5
Chen, C., Hu, J. L., & Yang, C. H. (2011). An international comparison of R&D efficiency of multiple innovative outputs: The role of the national innovation system. Innovation, 13(3), 341–360. https://doi.org/10.5172/impp.2011.13.3.341> https://doi.org/10.5172/impp.2011.13.3.341
Cullmann, A., Schmidt-Ehmcke, J., & Zloczysti, P. (2012). R&D efficiency and barriers to entry: A two stage semi-parametric DEA approach. Oxford Economic Papers, 64(1), 176–196. https://doi.org/10.1093/oep/gpr015> https://doi.org/10.1093/oep/gpr015
Dobrzanski, P., & Bobowski, S. (2020). The efficiency of R&D expenditures in ASEAN Countries. Sustainability, 12(7), Article 2686. https://doi.org/10.3390/su12072686> https://doi.org/10.3390/su12072686
Ellison, G., Glaeser, E., & Kerr, W. (2010). What causes industry agglomeration? Evidence from coagglomeration patterns. American Economic Review, 100(3), 1195–1213. https://doi.org/10.1257/aer.100.3.1195> https://doi.org/10.1257/aer.100.3.1195
Frantzen, D. (2000). R&D, human capital and international technology spillovers: A cross-country analysis. The Scandinavian Journal of Economics, 102(1), 57–75. https://doi.org/10.1111/1467-9442.00184> https://doi.org/10.1111/1467-9442.00184
Griliches, Z. (1990). Patent statistics as economic indicators: A survey. Journal of Economic Literature, 28(4), 1661–1707. https://doi.org/10.3386/w3301> https://doi.org/10.3386/w3301
Hansen, B. E. (1999). Threshold effects in non-dynamic panels: Estimation, testing, and inference. Journal of Econometrics, 93(2), 345–368. https://doi.org/10.1016/S0304-4076(99)00025-1> https://doi.org/10.1016/S0304-4076(99)00025-1
Hassan, M. K., Sanchez, B., & Yu., J. S. (2011). Financial development and economic growth: New evidence from panel data. The Quarterly Review of Economics and Finance, 51(1), 88–104. https://doi.org/10.1016/j.qref.2010.09.001> https://doi.org/10.1016/j.qref.2010.09.001
Ho, S., & Saadaoui, J. (2022). Bank credit and economic growth: A dynamic threshold panel model for ASEAN countries. International Economics, 170, 115–128. https://doi.org/10.1016/j.inteco.2022.03.001> https://doi.org/10.1016/j.inteco.2022.03.001
Huang, H., & Xu, C. (1998). Financing mechanisms and R&D investment (William Davidson Institute Working Papers Series 180). William Davidson Institute at the University of Michigan.
Inekwe, J. N. (2015). The contribution of R&D expenditure to economic growth in developing economies. Social Indicators Research, 124(3), 727–745. https://doi.org/10.1007/s11205-014-0807-3> https://doi.org/10.1007/s11205-014-0807-3
Kacprzyk, A., & Doryn, W. (2017). Innovation and economic growth in old and new member states of the European Union. Economic Research-Ekonomska Istraživanja, 30(1), 1724–1742. https://doi.org/10.1080/1331677X.2017.1383176> https://doi.org/10.1080/1331677X.2017.1383176
Khan, M. S., & Senhadji, A. (2003). Financial development and economic growth: A review and new evidence. Journal of African Economies, 12, 89–110. https://doi.org/10.1093/jae/12.suppl_2.ii89> https://doi.org/10.1093/jae/12.suppl_2.ii89
Kremer, S., Bick, A., & Nautz, D. (2013). Inflation and growth: New evidence from a dynamic panel threshold analysis. Empirical Economics, 44, 861–878. https://doi.org/10.1007/s00181-012-0553-9> https://doi.org/10.1007/s00181-012-0553-9
Law, S. H., Azman-Saini, W. N. W., Mansor, H., & Ibrahim, M. H. (2013). Institution quality thresholds and the finance-growth nexus. Journal of Banking and Finance, 37(12), 5373–5381. https://doi.org/10.1016/j.jbankfin.2013.03.011> https://doi.org/10.1016/j.jbankfin.2013.03.011
Levine, R. (1997). Financial development and economic growth: Views and agenda. Journal of Economic Literature, 35(2), 688–726. https://www.jstor.org/stable/2729790> https://www.jstor.org/stable/2729790
Li, X. (2009). China’s regional innovation capacity in transition: An empirical approach. Research Policy, 38(2), 338–357. https://doi.org/10.1016/j.respol.2008.12.002> https://doi.org/10.1016/j.respol.2008.12.002
Li, G., Wang, P., & Pal, R. (2022). Measuring sustainable technology R&D innovation in China: A unified approach using DEA-SBM and projection analysis. Expert Systems with Applications, 209, Article 118393. https://doi.org/10.1016/j.eswa.2022.118393> https://doi.org/10.1016/j.eswa.2022.118393
Lucas, R. E. (1988). On the mechanics of economic development. Journal of Monetary Economics, 22(1), 3–42. https://doi.org/10.1016/0304-3932(88)90168-7> https://doi.org/10.1016/0304-3932(88)90168-7
Rodríguez-Pose, A. (2001). Is R&D investment in lagging areas of Europe worthwhile? Theory and empirical evidence. Paper in Regional Science, 80(3), 275–295. https://doi.org/10.1111/j.1435-5597.2001.tb01800.x> https://doi.org/10.1111/j.1435-5597.2001.tb01800.x
Romer, P. M. (1990). Endogenous technological change. Journal of Political Economy, 98(5), S71–S102. https://doi.org/10.1086/261725> https://doi.org/10.1086/261725
Roodman, D. (2009). A note on the theme of too many instructions. Oxford Bulletin of Economics and Statistics, 71(1), 135–158. https://doi.org/10.1111/j.1468-0084.2008.00542.x> https://doi.org/10.1111/j.1468-0084.2008.00542.x
Schumpeter, J. A. (1942). Capitalism, socialism, and democracy. University of Illinois at Urbana-Champaign’s Academy for Entrepreneurial Leadership Historical Research Reference in Entrepreneurship. SSRN. https://ssrn.com/abstract=1496200> https://ssrn.com/abstract=1496200
Shen, C. H., & Lee, C. C. (2006). Same financial development yet different economic growth: why? Journal of Money, Credit and Banking, 38(7), 1907–1944. https://doi.org/10.1353/mcb.2006.0095> https://doi.org/10.1353/mcb.2006.0095
Shi, Z., Wu, Y., Chiu, Y. H., Shi, C., & Na, X. (2022). Comparing the efficiency of regional knowledge innovation and technological innovation: a case study of China. Technological and Economic Development of Economy, 28(5), 1392–1418. https://doi.org/10.3846/tede.2022.17125> https://doi.org/10.3846/tede.2022.17125
Sokolov-Mladenović, S., Cvetanović, S., & Mladenović, I. (2016). R&D expenditure and economic growth: EU28 evidence for the period 2002–2012. Economic Research-Ekonomska Istraživanja, 29(1), 1005–1020. https://doi.org/10.1080/1331677X.2016.1211948> https://doi.org/10.1080/1331677X.2016.1211948
Teixeira, A., & Queirós, A. (2016). Economic growth, human capital and structure change: A dynamic panel data analysis. Research Policy, 45, 1636–1648. https://doi.org/10.1016/j.respol.2016.04.006> https://doi.org/10.1016/j.respol.2016.04.006
Tone, K. (2002). A slacks-based measure of super-efficiency in data envelopment analysis. European Journal of operation Research, 143(1), 32–41. https://doi.org/10.1016/S0377-2217(01)00324-1> https://doi.org/10.1016/S0377-2217(01)00324-1
Valderrama, D. (2003). Financial development, productivity, and economic growth. FRBSF Economic letter, 18, 1–3. http://www.frbsf.org/publications/economics/letter/2003/el2003-18.html> http://www.frbsf.org/publications/economics/letter/2003/el2003-18.html
Wang, E. C., & Huang, W. (2007). Relative efficiency of R&D activities: A cross-country study accounting for environmental factors in the DEA approach. Research Policy, 36, 260–273. https://doi.org/10.1016/j.respol.2006.11.004> https://doi.org/10.1016/j.respol.2006.11.004
Wang, K. L., Zhang, F. Q., Xu, R. Y., Miao, Z., Cheng, Y. H., & Sun, H. P. (2023). Spatiotemporal pattern evolution and influencing factors of green innovation efficiency: A China’s city level analysis. Ecological Indicators, 146, Article 109901. https://doi.org/10.1016/j.ecolind.2023.109901> https://doi.org/10.1016/j.ecolind.2023.109901
Wu, M., Wang, X., Chen, X., & Cao, Y. (2020). The threshold effect of R&D investment on regional economic performance in China considering environmental regulation. Technology Analysis and Strategic Management, 32(7), 851–868. https://doi.org/10.1080/09537325.2020.1715362> https://doi.org/10.1080/09537325.2020.1715362
Zeng, W., Li, L., & Huang, Y. (2021). Industrial collaborative agglomeration, marketization, and green innovation: Evidence from China’s provincial panel data. Journal of Cleaner Production, 279, Article 123598. https://doi.org/10.1016/j.jclepro.2020.123598> https://doi.org/10.1016/j.jclepro.2020.123598
Zhang, A., Zhang, Y., & Zhao, R. (2003). A study of the R&D efficiency and productivity of Chinese firms. Journal of Comparative Economics, 31(3), 444–464. https://doi.org/10.1016/S0147-5967(03)00055-6> https://doi.org/10.1016/S0147-5967(03)00055-6
Zhang, L., Mu, R., Hu, S., Yu, J., & Zhang, J. (2022). Industrial coagglomeration, technological innovation, and environmental pollution in China: Life-cycle perspective of coagglomeration. Journal of Cleaner Production, 362, Article 132280. https://doi.org/10.1016/j.jclepro.2022.132280> https://doi.org/10.1016/j.jclepro.2022.132280
Zhu, P. F., & Xu, W. M. (2003). On the impact of government’s S&T incentive policy on the R&D input and its patent output of large and medium-sized industrial enterprises in Shanghai. Economic Research Journal, 6, 45–53.
View article in other formats
CrossMark check
Published
Issue
Section
Copyright
Copyright (c) 2024 The Author(s). Published by Vilnius Gediminas Technical University.
License
This work is licensed under a Creative Commons Attribution 4.0 International License.