Xiaolan Fu

Township and Village Enterprises in China

Township and Village Enterprises (TVEs) have played a significant role in the growth of the Chinese economy since the economic reforms of 1978. This paper analyses the productive efficiency of a cross section of TVEs in the manufacturing sector. TVEs are found to be much more efficient than comparable state-owned enterprises (SOEs). They are also competitive in the international markets. Their management which responds to market forces and their outward-orientation have contributed to their productive efficiency. The paper concludes that efficient management, which successfully exploits the endowments and resources of the country rather than the nature of ownership of production entities, is crucial to the success of manufacturing firms.

Exports, technical progress and productivity growth in a transition economy: a non-parametric approach for China

Theories suggesting either static or dynamic productivity gains derived from exports often assume the prior existence of a competitive market. In the presence of market imperfection and distortion, however, the competition and resource reallocation effects of exports on productive efficiency may be greatly reduced; and there may actually be disincentives for innovation. This paper analyses the impact of exports on aggregate productivity growth in a transition economy using a panel of Chinese manufacturing industries over the period 1990–1997. TFP growth is estimated by employing a non-parametric approach and is decomposed into technical progress and efficiency change. No evidence has been found suggesting significant productivity gains at the industry level resulting from exports. Findings of the current study suggest that, for exports to generate significant positive effect on TFP growth, a well-developed domestic market and a neutral, outward-oriented policy are necessary.

Foreign Direct Investment and Managerial Knowledge Spillovers through the Diffusion of Management Practices

Although managerial knowledge spillovers have long been claimed to be a major benefit of foreign direct investment (FDI), such spillovers have not yet been systematically analysed. This paper adds to the literature by analysing the nature and extent of managerial knowledge spillovers from FDI through the diffusion of management practices. Taking into account the tacit and explicit elements of management practices and distinguishing between industry and non‐industry specific practices, the paper identifies different types of spillovers and discusses their transmission mechanisms. Evidence from establishment‐level panel data from the UK attests to the existence and significance of intra‐industry, linkage, and non‐linkage based inter‐industry spillovers of managerial knowledge from foreign to local firms, although the strength varies for different types of practices. The spillovers are geographically localized, especially in channels without supply chain linkages. Local firms are selective in the adoption of individual practices and the spillover effects are more significant at the cluster and management system level. Reverse spillovers from local firms to MNEs from industrialized countries appear to be limited despite significant spillovers of practices amongst local firms.

FDI and environmental regulations in China

This paper uses provincial socioeconomic and environmental data and investigates whether there exists an intra-county pollution haven effect for China. We examine whether differences in the stringency of environmental regulations affect the choice of location for FDI in China. We use a five-year panel dataset for 30 provinces in China that includes three measures of environmental regulations, which vary across time and province, and a significant number of control variables including measures of agglomeration and factor abundance. We control for unobserved heterogeneity by using a feasible generalised least square estimator. Our results suggest that environmental stringency has a significant and negative effect on FDI, leading us to conclude that, ceteris paribus, FDI prefers to locate into regions with relatively weak environmental regulations. This provides some support for the existence of a pollution haven within China.

Technology transfer, indigenous innovation and leapfrogging in green technology: the solar-PV industry in China and India

In recent years China and India have achieved tremendous technological progress and development in the solar photovoltaic (PV) industry. Using case studies, this paper analyses and compares the technology progress in the solar PV industry in China and India, and discusses the role national innovation systems played in sustaining technology acquisition, adaptation and development. It illustrates that both countries adopted a strategy of mixing and sequencing different technology transfer and indigenous innovation mechanisms. The experience of both countries also suggests that a functional national environmental innovation system is important in sustaining and advancing technology acquisition, adaptation and development. This paper provides an alternative pathway for developing countries to follow in catching up with developed countries in the emergent green industries and in leapfrogging towards an internationally competitive green economy.

THE CREATION AND DIFFUSION OF INNOVATION IN DEVELOPING COUNTRIES: A SYSTEMATIC LITERATURE REVIEW

In this study, we review the literature on the creation and diffusion of innovation in the private sectors (industry and services) in developing countries. In particular, we collect evidence on what are the barriers to innovation creation and diffusion and the channels of innovation diffusion to and within developing countries. We find that innovation in developing countries is about creation or adoption of new ideas and technologies; but the capacity for innovation is embedded in and constituted by dynamics between geographical, socio-economic, political and legal subsystems. We contextualize the findings from the review in the current theoretical framework of diffusion of innovations, and we emphasize how the institutional context typical of developing countries impacts the diffusion itself.

Open innovation in China: policies and practices

Purpose – The purpose of this paper is to review the evolution of policies and practices of open innovation (OI) in China under globalization.Design/methodology/approach – This is a review paper. It combines historical archives and case study approaches, covering policies and practices at both the macro‐ and micro‐levels.Findings – It is found that Chinese firms have in practice employed a variety of OI models since the reforms of science and technology systems in the mid‐1980s. Policies introduced by the Chinese Government with respect to inbound and outbound OI, as well as policies encouraging OI networks, have encouraged Chinese firms to adopt various OI modes and practices. Some critical institutional challenges still need urgent attention and effective efforts to reinforce them.Originality/value – This paper aims to fill the gap in the literature by providing the first systematic review of the evolution of the policies and practices of OI in China, and exploring the implications for latecomer firms i...

China's Path to Innovation

Over the past three decades, China has experienced rapid economic growth and a fascinating transformation of its industry. However, much of this success is the result of industrial imitation and China’s continuing success now relies heavily on its ability to strengthen its indigenous innovation capability. In this book, Xiaolan Fu investigates how China can develop a strategy of compressed development to emerge as a leading innovative nation. The book draws on quantitative and qualitative research that includes cross-country, cross-province and cross-firm analysis. Large multi-level panel datasets, unique survey databases, and in-depth industry case studies are explored. Different theoretical approaches are also used to examine the motivations, obstacles and consequences of China’s innovation with a wider discussion around what other countries can learn from China’s experience. This book will appeal to scholars and policy-makers working in fields such as innovation policy, technology management, development and international economics and China studies.

Spatial characteristics and dynamics of provincial total factor productivity in China

This paper explores the influence of spatial effects on the convergence of total factor productivity (TFP) across Chinese regions. We use the Moran index, Markov transition matrix and panel data techniques to analyse spatial dependence, transition dynamics and disparities in TFP across Chinese provinces over the period from 1978 to 2004. We find that in the period following 1978, there has been an increase in spatial dependence in provincial-level TFPs across the various regions in China. However, the extent of this dependence is not the same across regions and the direction of movement of provincial TFP does not show convergence. On the contrary, provincial TFPs at the middle quintile level moved to the quintile levels at the highest and lowest levels, suggesting divergence and polarization in TFP across Chinese regions. The ‘New Eastern Region’ appears to be a TFP convergence club over the sampling period but no evidence is found suggesting convergence of TFP between provinces in the other subgroups. Policy implications are discussed.

The rise of technological power in the South

PART I: POLICY, STRATEGY AND CATCH-UP Innovation Strategies of Three of the BRICS: Brazil, India and China- What Can We Learn From Three Different Approaches? C.Dahlman Technological Catch Up of the Late Comers: Implications from the BRICS D.Nayyar Chinas Development Model: An Alternative Strategy for Technological Catch-Up X.Liu Science and Technology Policy in South Africa: A Critical Assessment of Past Performance and of Proposed Future Directions D.Kaplan The Changing Geography of Innovation Activities: What do Patent Indicators Imply? X.Li & Y.Pai PART II: INNOVATION SYSTEMS AND TECHNOLOGICAL CAPABILITES The Finance of Innovative Investment in Emerging Economies J.Mayer A Comprehensive Model of Technological Learning: Empirical Research on Chinese Manufacturing Sector J.Chen, X.Pu & H.Shen The Innovation of SMEs and Development of Industrial Clusters in China: The Case of Yiwu Socks Cluster W.Jinmin PART III: FOREIGN DIRECT INVESTMENT TECHNOLOGY TRANSFER FDI, R&D and Innovation in the Chinese Automobile Industry F.Chen & P.Mohnen Role of Foreign Direct Investments in the Development of Innovative Capacity- Case of Russian Companies J.Vaatanen , D.Podmentina & M.Aleksandrova Human Capital and Technological Spillovers from FDI in the Chinese Regions: a Threshold Approach M.Fu & T.Li Third World multinationals and South-South FDI T.Fredriksson PART IV: TECHNOLOGY AND SUSTAINABLE DEVELOPMENT Technological Competences in Sustainable Technologies in the BRICS Countries R.Walz Information and Communications Technologies for Integration and Development: A Comparative Study of South Africa and Brazil in their Regional Contexts P.Akpan-Obong & M.C.Parmentier Sustainability of Technology-intensive Social Innovation in India: the Role of Absorptive Capacity and Complementary Assets X.Fu & C.Polzin Market Oriented Reforms, Domestic Technological Capabilities and Economic Development in Latin America J.Katz Conclusions L.Soete & X.Fu