FDI Stock, R&D Stock and Independent Innovation-A Dynamic Panel GMM Analysis of Provincial Data in China

A country's innovation ability is the result of combined action between internal cause and the external cause. By utilizing the number of inventions patents application accepted as the index of innovation, and estimating FDI stock and R&D stock, the paper conducts a dynamic panel analysis of the impacts of the FDI stock and R&D stock to innovation using panel data from Chinese provinces during the period 1997-2007. Result followed as: The R&D investment and the numbers of technological activity personnel and economic growth are the primary factors of innovation in our country, and opening factors are indispensable. Simultaneously we also discovered that the innovation level of the past existence was remarkable influence to the later period innovation.