1. 1 Science and Technology Takeoff in China?: Theoretical and Empirical Perspectives Gao Jian Tsinghua University Gary H. Jefferson Brandeis University Workshop on Global R&D in China Nanjing, China May 27-29, 2005

2. 2 Has China begun its “Science and Technology Takeoff”? Most large OECD nations experienced S&T takeoff in which R&D/GDP rose rapidly from 2%. R&D/GDP has risen from 0.06% in 1996 to 1.3% in 2003. This is a measure only of R&D intensity, not quality

3. 3 Scatterplot: R&D/GDP vs. log GDP/capita

4. 4 S&T takeoff in 10 countries (vertical axis: R&D/GDP)

5. 5 Changes in firm-level R&D intensity, 1995-2001

6. 6 What factors motivate firms to spend more on R&D, i.e. increase the ratio of R&D labor to the total workforce?

7. 7 #1. An increase in the share of GDP dedicated to technology-intensive intermediate goods

8. 8 #2. The growing availability of complements to R&D personnel, i.e. factors that significantly expand the productivity of R&D personnel

9. 9 #3. Expanding the knowledge base from which innovation (and imitation) is drawn: a quickening of international technology diffusion

10. 10 #4. Deepening subsidies to R&D labor

11. 11 Conclusions and discussion Other factors affecting the timing of China’s S&T takeoff:  Size – market size motivates investors to locate (achieve scale economies) in China rather than depend on imports.  Geographic location (e.g. proximity to Japan, S. Korea, H.K., and Taiwan  Domestic S&T policy, e.g. technology for markets

12. 12 The following slides are available for a discussion session if relevant

13. 13 Composite measures of city complementarities lnZ i =  1i +  2i LOC j +  3k IND k Openness (int’l tech diffusion) (1) complementaritiesComposite measure: (1)+(2)+(3)+(4) Human capital (2) R&D network (3) Institutiona quality (4) Seoul2.9321.301.485.6231.18 Beijing0.00 Chengdu-8.370.448.07-2.79-7.92 Guangzhou6.711.063.254.526.63 Shanghai10.651.388.467.4825.15 Tianjin-0.93-6.30-7.642.59-10.76

14. 14 Composite measures of R&D complements and estimated returns to R&D personnel

15. 15 Relationship between returns to R&D and R&D complements (R-sq = 0.910)