Research On Open Economy, Heterogeneity And Technology Innovation

The Twelfth Five-Year Development Plan has put forward the guiding idea that let open policy promote economic development, reform, and innovation. Taking full advantage of the open policy, strengthening scientific and technological innovation, and narrowing the technology gap with the developed countries have became one of the most important issues that China’s economic development facing. Under this situation, the paper tries to answer the following questions, what is the mechanism between open economy, firm heterogeneity and total factor productivity? How to interpret the choice of technological progress mode in open economies? What is the determinant mechanism of innovation from the micro-perspective? Based on these questions, this dissertation focuses on the following aspects.This study, first, estimates and compares analysis of the total factor of productivity of30provinces and36industrial sectors from1993to2010and14474enterprises including8443domestic and6031foreign-funded enterprises using parameters and semi-parametric econometric methods. Further study is operated to explore the impact of heterogeneous properties of the industries and regions on total factor productivity. Second, this dissertation introduces the status variable of export behavior into trans-logarithmic production function, controls the firm heterogeneity properties, and examines in depth the mechanism of export behavior and Chinese enterprises’productivity using firm level panel data. Based on the controversy of self-selection hypothesis and the hypothesis of learning-by-export, we further test the causal link between export behavior and firm productivity. Using the production function spillover method, this dissertation investigates the relationship between foreign direct investment and enterprises’total factor productivity. We examine whether there is a threshold in terms of technology gap by introducing the multi-threshold model to examine the sustainability of FDI technology spillovers. The research results point out that despite the improvement of total factor productivity in Chinese industrial sectors in the past20years, there is a significant technology gap between domestic and international enterprises. The empirical results also indicate that the productivity of exporters is around20-30%higher than non-exporters. Such productivity advantages can be attributed to learning-by-exporting effects rather than self-selection efforts; that is, export activity promotes a firm’s productivity. As for the foreign direct investment, the premise of technology spillovers is that the domestic enterprises have sufficient technology levels and absorptive capabilities for learning and imitation. But, in the long run, the technology spillovers from FDI will slow with the further reduction of the technology gap, which we call the marginal decrease of FDI technology spillover effects. Hence it is inevitable to cultivate the independent R&D capability of domestic enterprises.Furthermore, this dissertation proposes a "double-edged" hypothesis in terms of technology gap which leads to nonlinear evolution of FDI technology spillovers. Also the paper considers both technology imitation and innovation into the quality ladder growth model and construct the endogenous growth model which is consistent with the reality of China’s economic development. After solving the steady-state equilibrium solution, the study explains the optimal allocation of R&D resources between the independent innovation and technology to imitate, and provide a theoretical analytical framework for decision mechanisms of technological progress mode of a country that is backward in technology. In addition, we expand the concept of heterogeneity into the comprehensive one of competing technologies, the cost of international trade and the technological level. Based on stated above, we construct the general equilibrium model combining the variables of technology and policy variables, and analyze the welfare under various conditions of trade. This work provides a theoretical analysis framework for technological progress in the open economy from the micro-perspective. Relevant conclusions from theoretical model explain the endogenous choice of industrial technological progress mode in open economy.To answer the third question, the dissertation examines the endogenous decision mechanism of innovation using the Chinese firm-level panel data by applying Probit random effects model. Especially, we introduce four main channels of international technology transfer into analysis framework, such as foreign direct investment, imports, exports and technology licensing, and fully consider the impact of heterogeneity issues on the firm’s innovation, including firm’s different ownership type, industry characteristics and so forth. Using panel data from27developed countries and57developing countries, the study systemically examines the relationship between IPR and technological innovation after controlling for a potential endogenous problem. According to the empirical results, we do not find the obvious evidence that FDI spur the firm technology innovation. However, the research shows that international trade and technology licensing present more positive role on promoting firm innovation in China. Furthermore, the firm with higher proportion of foreign capital has lower independent innovation capability. Domestic enterprises, especially private enterprises, play an important part in technology innovation during China’s economic transformation. As for the impact of institution on innovation, empirical results support the optimal IPR hypothesis. Paper finds that the threshold effects of stronger IPR on innovation depended on the initial IPR level. Neither very strong IPR nor very weak IPR are conducive to innovation. Furthermore, the optimal level of IPR in developed countries is higher rather than in developing countries; this difference implies that adoption of IPR standard of developed countries may be inefficient for developing countries.