Indigenous R%D effectiveness, technology transfer and productivity growth: evidence from the hi-tech industry of China

The study employs the panel data of 15 hi-tech industries over the period 2000-2010 to examine the effectiveness of R%D with respect to productivity change and to identify the significant contributing factors in the hi-tech sector of China. The Malmquist productivity indexes are calculated by using the non-parametric programming technique and the censored regression model is followed to conduct the empirical investigation. We find that, on average, the sector confronts the productivity deterioration, mainly owing to the technical inefficiency. The office equipment industry shows the optimal productivity gain in our sample at an average rate of 3.7% per annum mainly owing to the technical change. Furthermore, the Electronic Components Industry is found to be the most efficient industry in the sector, showing productivity progress on an average rate of 1.7% per year over the study period. Lastly, the Tobit model results convincingly indicate that spillovers through foreign direct investment (FDI) and technology import have significantly positive effect on the productivity progress.