Innovation Heterogeneity And The Technology Process Of China

Technological innovation is the power source of the economic growth and the catch up. Meanwhile, technological innovation is the main channel to improve the national welfare especially for the less developed countries. The studies on the technological innovation or technology progress have been the frontier of the economic growth theory, since the Endogenous Growth Theory took the technology as an endogenous factor. During the past two decades, the Endogenous Growth Theory made a fast development; however, lack of micro foundation is now restricting its development. Because of the above-mentioned defects, the studies about the micro mechanism of technology progress are stagnant. At present, the researchers and the governments do the researches and make policies always base on the assumption of Homogeneous Innovations. This assumption restricts the development of Endogenous Growth Theory, and influence the efficiency of the policies.Based on the above-motioned concerning, this paper takes the Heterogeneity Innovations into the traditional Endogenous Growth Model. It makes a tractable endogenous growth framework that contains multiple innovation sizes, multi-product firms, and entry/exit. Finally, it works out the relations between the heterogeneity innovations and technology progress, and finds out the micro foundation of the macro economic growth.The main topic of this paper is to study on the reconstruction of the endogenous growth framework which considers the heterogeneity innovations, and on the new path of macro technology progress. This paper tries to answer the following questions: firstly, why the motion of Chinese enterprises is limited? What are the relations between the motion and the heterogeneity innovations? Secondly, dose the heterogeneity exist objectively in the macro level, meso-level and micro level of economy? Thirdly, whether the traditional endogenous growth theory will have some bias if the heterogeneity innovations exist objectively? Fourthly, how to build a framework of economic growth which include the heterogeneity innovations, and what will be changed for the enterprises, industries, and countries in this framework? In this paper, we use the unified framework——verifying the existence of the problem, solving the problem theoretically and making conclusions, empirically testing the conclusions of the theoretic research——to study the above-mentioned problems and come out with the following conclusions:Firstly, innovation heterogeneity has great influence upon public R&D investment, macro technological progress and economic growth. Based on Klette and Kortum (2004)'s endogenous growth model and the model of Akcigit and Kerr(2010) which has considered about heterogeneous innovations, this paper involves the concept of innovation heterogeneity completely into the framework of endogenous growth. The result shows that larger technological innovation efficiency difference (heterogeneous level) between enterprises makes larger technological innovation investment, higher level of macro technological progress and larger steady-state growth rate of the overall economy. That is to say innovation heterogeneity benefits the improvement of R&D investment of the overall economy, macro technological progress and steady-state economic growth rate.Secondly, ignoring the innovation heterogeneity would greatly overrate the effect of government support for enterprise innovation. In this paper, we construct a signaling mechanism between the government and enterprises and find out that the government's innovation support policies promote the enterprises" technological innovation activities without regard to the innovation heterogeneity. Considering about the innovation heterogeneity, the scale expansion effect of innovation brought by government's policy support would be reduced, especially when there is remarkable innovation efficiency difference between two enterprises. Therefore, if the existence of innovation heterogeneity is neglected, the effect of government support would be greatly overrated. This paper also conducts the empirical test of the above-mentioned hypothesis. Using the data of Zhejiang province from the Second "National R&D Resource Checking Work, we confirm the existence of the signaling mechanism between government support and enterprises'technological innovation. It shows that enterprises use innovation capability as a signal which can be received by the government. The signaling mechanism increases the technological innovation output of enterprises. However, the effect of government support would be weakened if we take the innovation heterogeneity into consideration.Thirdly, the innovation heterogeneity widely exists among enterprises, industries and countries at micro, medium and macro level. And the distortion of government innovation support is the main cause of low level of technological innovation efficiency. Based on the cross section data of enterprises(from the Second National R&D Resource Checking), the panel data of industries(large and medium-size industrial data), the panel data of countries(OECD, China, Russia and Singapore), we use LP-SR to measure the technological innovation efficiency. Further, we use methods such as mean value test and comparative analysis approach of coefficient of variation and verify the existence of the innovation heterogeneity. Based on the above-mentioned research, we conduct an empirical test of 36 industries' technological innovation efficiency and the influential factors by SFA. The results show that because of the government's long-term preferences of technological innovation and the lack of supervision on the use of funds, the effect of the government's direct and indirect administrative intervention upon technological innovation efficiency is not significant, even negative, and its negative effect on market-oriented technological innovation efficiency is even more significantFourthly, the existence of innovation heterogeneity at macro level would influence the determinants of technological progress of the overall economy. In this paper, we use time series data and introduce the country-level innovation heterogeneity to compare the determinants of China and Japan's technological progress. The results indicate that, in an open economy, economic activities such as import trade, FDI and technology introduction are the main channel for R&D capital flow. To some extent, this conclusion reflects a country's level of international division of labor. The country that gains low level of match technology from the technology spillovers of R&D capital flow is at the low-end of the value chain in the international division of labor. It can only match with low level technology in the international technology diffusion, therefore, the effect of technology spillovers of R&D capital flow is still low. Vice versa, when a country is at the high-end of the value chain in the international division of labor, it generates a cumulative advantage from labor division and technology diffusion and absorbs high-level technology to obtain higher technology spillover effect. In other words, the existence of innovation heterogeneity among countries determines the existence of "Matthew Effect" in the absorption of international technology heterogeneous diffusion.The possible innovation points of this paper mainly lie in constructing an endogenous growth model which considers the innovation heterogeneity in theory, thus finding the micro foundation of macro technological progress; and building up a signal sending mechanism to solve the problems of Chinese enterprises'technological innovation and the government's supporting policies, accordingly discussing the effect of innovation heterogeneity on government policies. Specifically, it includes the following three aspects:Firstly, bringing the idea of innovation heterogeneity into the endogenous growth framework and making a detailed characterization of the micro foundation of macro technological progress. The micro-foundation of macroeconomic growth is the forefront of international economics research in recent years, on the basis of theoretic model of Akcigit and Kerr (2010), this paper further brings the efficiency differences of enterprises'technological innovation into the analysis framework. In this paper, the type of R&D and the degree of R&D are defined as the function of the efficiency of enterprises'technological innovation (i.e. innovation heterogeneity determines the enterprises'R&D type and degree), thus discussing the micro foundation of macro technological progress. It can be said that the marginal contribution of theory in this aspect will provide some new perspective for the research of the micro foundation of existing endogenous growth theory.Secondly, building up a signal sending mechanism to explain the endogenous mechanism of the power shortage of enterprises'technological innovation which dominated by the government. Researches on the underexcitation of China's enterprises'technological innovation are mostly based on empirical evidences:few scholars discuss this issue in theory. This paper building up a signal sending model that considering the innovation heterogeneity, this model demonstrates the existence of the innovation heterogeneity, enterprises with low innovation efficiency need more innovation inputs in order to achieve the same outputs, and the pay for imitating the enterprises with high innovation efficiency will also increase. Therefore, in the case of a given degree of government support, the existence of innovation heterogeneity will reduce the inputs of enterprises' technological innovation in the whole market.Thirdly, the new findings in empirical aspect of this paper are reflected in two aspects. One is respectively measuring the efficiency of technological innovation from micro, moderate and macro dimensions, and using the mean test and the coefficient of variation to demonstrate the existence of innovation heterogeneity. Especially at the micro level, introducing the data of micro enterprises for analysis, which compensates for the defect of current academia few uses micro data. The other is respectively using the data of micro enterprises and macro enterprises to bring innovation heterogeneity into the general model of technological progress, verifying the conclusions of the above two theoretical models.We could re-examine China's innovation police through the theoretical and empirical research in this paper. The policy implication in this paper is:Firstly, we should learn the law of the existence of the innovation heterogeneity comprehensively and profoundly, and incorporate it into the core decision system of governmental scientific policy. According to the conclusion of this paper, the current government does not realize the existence and characteristics of innovation heterogeneity among firms, which leads the government and academia to overestimate the actual effect of governmental policies encouraging the development of science and technology. Secondly, we should change the distorted situation of governmental support and match the endogenous demand of firms and the exogenous supply of government. According to the conclusion of this paper, governmental support to firms' innovative activities is distorted to some extent. For example, government's preference to "future" technology innovation and the absence of capital supervision which leads the effect of governmental direct and indirect administrative intervention on technology innovation efficiency to be not significant. Thirdly, we should learn from Japanese experience that focusing on independent research and development sources of technology progress in China and Japan by putting innovation heterogeneity in to the function deciding technology progress. The conclusion is that currently China still focuses on learning and absorbing supplemented by independent research and development. Domestic research and development capital makes little contribution to technology progress due to poor management efficiency. In fact, the path of technology progress is restricted by the study on innovation heterogeneity.