Download Empirical Research on Technology Innovation Promoting Chinese Export Growth

Empirical Research on Technology Innovation Promoting Chinese
Export Growth
YAO Limin FANG Miaojie
College of Business Administration Zhejiang University of Technology, P.R.China, 310014
Abstract The high speed of Chinese export trade relying on high input is facing the double stresses
from home and abroad. Changing export increasing way becomes the necessary option of Chinese
export trade continuous development. The research taking each region in China as a sample indicates
that, under the basic frame capital and technology intensive industry export is still in inferior position
while the evident advantage which is labor intensive industry is declining, and technology innovation
factor has been showing positive effects on export trade, and functions are boosting up. Technology
innovation has turned into the key origin of Chinese export advantage. Along with the prompt
development of Chinese economy and foreign trade, technology innovation will be the focal force in
transforming Chinese foreign trade increasing pattern in the future.
Key words Technology innovation, Export, Patent, Export growth pattern
1 Introduction
Advance rapidly of science and technology and flourishing development of knowledge economy
force the international competition to be the competition of technology level and knowledge
accumulation as well as economic growth depends on technology and its innovation increasingly.
Meanwhile the experiences of developed countries indicate technology innovation turns to be the main
factor which decides the relative advantage and international competition ability of one country.
However, export advantage of developing countries like China mostly roots in abundant labor resources.
Domestic resources and environment limitation, upgrading of international trade barrier and pressure of
RMB appreciation, high speedily increasing foreign trade drive the transformation of increasing pattern.
Whether technology innovation will be the outbreak point of foreign trade increasing pattern or not is
heightened to the hot topic that government, enterprises and academic society concern about.
Technology innovation promoting export trade originates from two theory basis. One is based on
Heckscher-Ohlin-Samuelson international trade theory, which believes international trade depends on
factor endowment of trading countries. Although the initial specialization theory was founded on two
factors which are labor and capital, succedent new international trade theory bringing in knowledge,
technology and other factors as the endogenesis factor influencing the trade of one country. Another
theory basis seems technology as exogenous variable, analyzing its affects on international trade
dynamically; the main theories are technological gap theory of Posner and the product cycle hypothesis
of Vernon. Another way analyzes that, technology innovation input could develop new products, and
boosting existent product quality, sequentially advancing export competition ability of products; besides
product innovation and product advancing, technology innovation can improve export ability by
technology innovation and lowering cost.
The theory of technology Innovation promoting export trade is also demonstrated by many
empirical researches. Empirical analysis based on factor endowment theory mostly focused on the
research of the integrated country or multination. For example, Stern and Maskus（1981）using the data
from1960 to 1970, employing human capital and R&D input as the variables of producing function.,
making regression with export trade, educed the result that technology had significant promoting
function to trade. Hughes（1986）research based on UK trade data revealed domestic R&D input had
positive effects on UK export, while on which foreign R&D input had negative effects. Moreover,
Dosi(1990）, Wakelin (1998) respectively using R&D input or patent quantity to indicate innovation
variables, so the result of researches on UK, countries of OECD also advocated technology innovation
had evident promoting effects on trade.
Empirical researches based on technological gap theory and the product cycle hypothesis carried
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out from industry level, for example Wakelin (1998) analyzed 22 industries in 9 countries of OECD,
thus the result showed technology innovation had different effects on export trade along with different
industries；nevertheless, researches by Anderton (1999) , Ioannidis and Schreyer（1997）revealed ,
relative R&D output and relative patent quantity had greater function to the export in labor-intensive
industry. But Cotsomitis and so on (1991) studied on branch industry of trade situation of countries in
OECD, and finally they discovered industry technology innovation had no evident effects on trade.
Refer to the models, some scholar selected the single technology innovation variable to make
regression such as Soete (1987). While majority of literature adopted multiple regression, for example ,
Dosi (1990) , Wakelin (1998) , Peter (1997) , they using multi-variable wage or labor cost, investment,
technology innovation to analyze.
The above empirical researches selected developed countries as subjects, thus the conclusion
technology innovation promoting export trade can be the same with those developed countries. However,
in China, there were seldom empirical researches involving the relation between technology innovation
and export trade. Wei Long (2005) , made empirical researches selecting technology innovation and
Chinese high technology products export trade as variables, consequently evident technology innovation
can promote Chinese high technology products export trade, but the effects are quite limited. Researches
by Lai Mingyong and so on (1999) believed technology innovation had positive effects on international
competition ability of Chinese industry finished products. But Chinese economy and trade actuality
based on rich labor factor and advantage of low technology export, and the high input and risk of
technology innovation make those enterprises shrink, and they also doubt the export effect of technology
innovation. Therefore, whether technology innovation should be one way to change increasing pattern is
strengthened to the urgent problem in theory. This paper uses the above research fruits of scholar for
references, selecting the data of every Chinese province and region to analyze the effects technology
innovation on export trade.
2 Empirical Researches on Technology Innovation Promoting Export Trade
2.1 Statistic model and variables explanation
According to the above theory analysis, This paper selects technology innovation activity, capital
input and labor as variables effecting export trade, whose sample are 31 regions in China. Moreover, we
can’t neglect traditional factors such as capital, laboring and so on. Here capital input can accelerate
producing ability and flexibility of producing equipment; in addition, employing the capital equipment
which contains new technology also can elevate products’ quality. Thus, similarly expected capital input
can promote export trade. This paper introduces an index to indicate producing cost of products which
are of labor abundance characteristic. The index is the proportion working staff in each region accounts
for the national working staff. The higher the proportion is, the richer labor resources are, which also
shows it has positive effects on export trade. Furthermore, scale economy, natural resources endowment
and so on can also influence the export trade of one nation（region）. Because it is hard to confirm and
gain index and data, this doesn’t consider about them temporarily. Consequently, multiple regression
model can be expressed as：
E = f（I t-1, H t-1, K t-1, L）
Owing to the wide gap of each index and data, as well as considering the rationality of empirical
researches, each index in this paper adopts correlative index. The explanations of the variables in above
formula are as follows:
E: Export variable is a dependent variable. It can be expresses as the indexes: the ratio is export
occupying regional gross production (NER, Net trade ratio %), exports per labor force（ELF, Exports per
labor force 10thousand Yuan/ person）；
I: Direct technology innovation activity variable is an independent variable. It can be expresses as
the indexes: the ratio is R&D outlay output occupying regional gross production value (%), the
proportion scientists and engineering number occupying R&D staff (%), quantity of patent per 0.1
billion Yuan gross production value (piece / 0.1 billion Yuan). Thereinto, the former is the input variable
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of technology innovation, the latter is the output variable of technology innovation；
H: Human resources input variable is an independent variable. It can be expresses as the indexes:
the ratio is scientists and engineering number occupying working staff (%) , public education occupying
regional gross production value (%);
K: Capital input variable is an independent variable. It can be expresses as the index: the ratio is
new added fixed assets occupying regional gross production value (%);
L: Labor variable is an independent variable. It can be expresses as the index of working staff ratio
(%).
Moreover, technology innovation has the shortage of lagging period; there is a period of time to
merchandise the R&D output. Peter L.(1997) and Katharine Wakelin (1998) considered 4 years lagging
behind as the period when he made empirical researched on the relation between national technology
innovation and export trade in developed countries. Lai Mingyong etc. (1999) adopted the same year
data directly on the research, but they didn’t consider time gap. Author in this paper believes lagging
period of innovation still exist, and combine the viewpoints of above scholars, this paper adopts 1 year
as the lagging period. The human capital input, fixed assets investment variables adopts 1 year as the
lagging period as well.
The pertinence analysis based on correlative variables (this paper omits), we select the ratio that
R&D outlay output occupies regional gross production value and quantity of patent per 0.1 billion Yuan
gross production value as technology innovation variables, the ratio public education occupies gross
production value as human resources input variable, the ratio new added fixed assets occupies regional
gross production value as capital input variable, working staff ratio as labor variable. We select these
variables to make regression analysis with export variable.
2.2 research subjects and data explanation
The data of the year 2004 and 2005 are the basis of this empirical research. Research subjects are
31 regions, including 22 provinces, 4 cities and 5 autonomous regions in China. The data on technology
innovation mostly come from “Chinese Science and Technology Static Yearbook ”; The data on public
education come from “Chinese Education Yearbook ”(budget education outlay); The data on fixed assets
is manufacturing new added and reconstructed fixed assets, which come from “Chinese Static
Yearbook ”; The data on working staff come from “Chinese Static Yearbook”, adopting yearly mean poll
of all working staff of state-owned and non state-owned industry enterprises in each region; the data on
regional gross production value and export come from “Chinese Static Yearbook”.
Technology innovation activity is divided into innovation input and output, the former refers to
R&D output, and the latter refers to patent quantity. Through the empirical test of R&D output and
patent quantity, the degree of fitting in model which selects R&D input intensity as technology
innovation output index is not favorable（confirmed coefficient R2 is less than 50%），while the degree of
fitting in model which selects patent quantity as technology innovation output index is favorable
（confirmed coefficient in three models R2 is more than 50%）. The following is taking patent quantity
as technology innovation output model for example to analyze.
2.3 Empirical test of technology innovation promoting export trade
Analyzing technology innovation output (patent) from the effects of technology innovation
promoting export trade, statistic model can be expressed as：Y =α+γ1 IPt-1+γ2 H t-1+γ3 F t-1+γ4 L +ε
Thereinto: IP stands for quantity of patent per 0.1 billion Yuan gross production value, indicating
quantity of patent one region certain economic scale possesses；H stands for public the ratio public
education occupies gross production value；F stands for the ratio new added fixed assets occupies gross
production value；L stands for working staff ratio；Y stands for exports per regional gross production
value (EXR), exports per labor force (EXLF). The regression result is in Table 1.
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Table1 regression result on effects of technology innovation on export
Independent variable
Coefficient Dependent variable is exports per
Dependent variable is exports per
gross production value, EXR
labor force, EXLF
Model 1
Model 2 2004 Model 3
Model 4 2004
3.884
-2.846
0.394
(2.961)
(0.154)
(-1.367)
Variable of technology
γ1
0.199***
23.019****
3.927***
8.016****
innovation output
(14.942)
(6.871)
(3.414)
(3.264)
IP
Variable of human
γ2
1.938
-6.882
43.572
25.651
capital H
(-0.275)
(0.554)
(0.788)
(0.858)
Variable of fixed
γ3
2.469
-63.845**
9.471
-94.442**
assets
(-2.475)
(-2.003)
(0.946)
(0.176)
F
Variable of labor
γ4
2.530**
53.353
33.937*
13.542
L
(0.790)
(0.599)
(2.218)
(1.440)
2
2
R2 = 0.921
R2 = 0.732
R = 0.368
R = 0.543
N = 31
N = 31
N = 31
N = 31
F = 75.944
F = 17.717
F = 7.732
F = 5.372
Notice: the value in square bracket is t statistic value of the correlation coefficients in Figure;
*, **, ***, **** respectively stands for the evidence on the level of 10%, 5%, 1%, 0.1%.
constants
：2000
-0.195
(-1.940)
α
：
：2000
：
The above results shows the degree of fitting in model in 2004 is better than in2000. In model in
2004 are respective 0.921 and 0.732 thus the explanation degree which independent variable explains
dependent variable is quite high, F value test is fitting for statistic principle. Regression analysis shows
the relation between technology innovation output variable IP and export variable is obviously
positive namely increasing quantity of patent per 0.1 billion Yuan gross production value has positive
function on export trade. If the former increases 1 percent the export occupying gross production value
will elevate 23.019 percent model 2 and exports per working staff will elevate 80.16 thousand Yuan
model 4 . Equally working staff ratio L has positive function on export trade variable, t statistic in
model in 2000 is evident, while it is the opposite in 2004; while the effects of the ratio public education
occupies gross production value H on export trade is not confirmed, and is not significant. Finally,
the ratio new added fixed assets occupies gross production value in 2004 K has negative and
significant effects, the coefficient of model in 2000 is not significant.
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3 Conclusions
This paper researches on effects factors selects every region in China as sample, the empirical
research has the following conclusions:
(1) Technology innovation has significantly positive effects on export trade. It explains technology
innovation is an important origin of Chinese export advantage. High accelerating Chinese trade faces the
double stresses from resources and environment limitation at home and trade barrier abroad, thus
transforming trade increasing pattern is the inevitable option. In the previous stage in China, the
function of technology innovation is gradually emerging. Hence, adding technology innovation input
and encouraging technology innovation will be the important outbreak of transforming trade increasing
pattern.
(2) Capital variable has negative effects on export trade gradually. Capital input tends to reversal
export trade, which means the more input is, the stronger restrain function is. From this side, capital
investment in each region and city more tends to the investment and development of import competitive
industries, and the strength of structure adjustment is increasing, but quite a lot capital intensive industry
such as medicine, petroleum products, metal smelting, general and specific equipment, transportation
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equipment, specific instrument and so on still don’t turn into advantage industry of Chinese export.
(3) Labor variable has positive effects on export trade. China is a nation which is of rich labor
resources, as a developing country, and the abundant and low price labor force is the main dominant
origin. Moreover, in export trade, the export ratios of labor intensive industry such as textile, costume,
leather, metalwork occupy greatly, thus labor variable performs the positive effects on export trade. But
the coefficient hasn’t passed t test in model in 2004, which reveals the function labor factor promoting
export is recession.
(4) The effects of the ratio public education occupies gross production value H on export trade is
not confirmed. Overall investment of human capital can promote the development of export trade, but
excellent system and transforming mechanism is needed in the process of transforming public education
to productivity then forming the export advantage. Obviously, the gap between regional system qualities
is far wider than public education output. Furthermore public education input will worsen its function on
local export along with labor mobility. Thereout, it is not so hard to understand public education output
has unconfirmed export contribution.
In a word, under the basic frame capital intensive industry is still in export inferior position while
the evident advantage which is labor intensive industry is continuous, technology innovation factor has
been showing positive effects on export trade. Along with the prompt development of Chinese economy
and foreign trade, technology innovation has turned into the key origin of Chinese export advantage.
Thus we can come into a conclusion, it has shown significant reality sense to realize transforming trade
increasing pattern in China in this stage by increasing technology innovation input and encouragement.
The advantage of labor intensive products shows its recession at the same time, while fixed assets input
has evident reversal export tendency, and the overall interior statue of capital intensity industry is not
altered from the bottom. Therefore, encouraging technology innovation will be the focal force in
promoting export trade in the future.
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References
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