Foreign Technology Transfers in China

Abstract

Innovation can be achieved via various channels, and the effectiveness of each channel depends on the stage of development as well as the local social-economic settings. Based on the concept that innovation is not only limited to invention but also characterized as a learning and adopting process, this chapter discusses the important role of foreign technology sources in China’s innovation path. Different types of foreign knowledge sources are reviewed, including trade, technology licensing, inward and outward foreign direct investment (FDI), internationalization of research and development (R&D), global value chain, and returnees. The discussion highlights the complementary effect between foreign knowledge sources and indigenous innovation efforts in fostering technological upgrading in China. To maximize the benefits from innovation and accelerate catching up, the explicit and well-focused encouragement of indigenous innovation and acquisitions of foreign knowledge must work in parallel.