Spatial differentiation of China’s industrial enterprise R&D efficiency

Abstract

Technology innovation is a key factor of international competitiveness and promotion of economic growth. As a core driver of technological innovation, research and development (R&D) activity has a direct impact on a nation’s level of innovation. Therefore, many countries attempt to strengthen innovation outcomes by increasing expenditure on R&D. However, there is not a simple linear relation between R&D activity and outcomes, and many authors take R&D efficiency as the key indicator of a company or region’s capability to innovate. China’s spending on R&D has accelerated in recent years, reaching 1.97 trillion yuan (about $286 billion) in 2018, ranking second in the world. This paper focus on discussing the R&D efficiency of China’s industrial enterprises. R&D efficiency refers to the conversion efficiency between input and output of all factors in the R&D process, reflecting the contribution of R&D input to R&D output or the allocation efficiency of R&D resources. Due to different levels of regional development, there are also different levels of R&D performance across these regions. The R&D capabilities of enterprises show significant variation across regions. Lee and Park (2005) classifies 27 countries into four clusters based on their output-specialized R&D efficiency: inventors, merchandisers, academicians and duds, showing for example that Singapore ranks high in total efficiency while Japan demonstrates patent-oriented efficiency. Meanwhile, mainland China, South Korea, and Chinese Taiwan are found to be relatively inefficient in R&D. SPATIAL DIFFERENTIATION OF CHINA’S INDUSTRIAL ENTERPRISE R&D EFFICIENCY