INDIGENOUS INNOVATION, FOREIGN TECHNOLOGY TRANSFER AND THE EXPORT PERFORMANCE OF CHINA'S MANUFACTURING INDUSTRIES

Although a well-established link is observable in the existing literature on innovation-export interplay, there is a lack of research investigating the distinct impact of a variety of channels for domestic innovation and foreign technology spillovers on export performance in a unified framework. This paper uses a two-digit 1998-2013 panel dataset to empirically investigate the impact of domestic innovation efforts, innovation capability, foreign knowledge spillovers and technology transfer on export performance of large-and-medium-sized industrial enterprises (LMEs) in China. We find that: First, domestic innovation efforts significantly promote industrial export performance, while there is lack of highly-skilled human capital in China which restricts the favorable impact of innovation on exports; Second, technology imported from foreign countries have increased export competitiveness in China. Furthermore, innovative activities of foreign enterprises have led to export boom and this spillover channel experience has a stronger effect on export than one emanating from imported technology; Third, on the whole, foreign knowledge spillover channels have been more effective drivers of export performance than domestic innovation efforts. Fourth, calculations based on contribution to trade balance indicator witness a recent increase in the domestic content of industrial exports in China.