LI Ping, YU Guocai
Author information
School of Economics, Shandong University of Technology, Zibo 255049, China
E-mail: eveecho@126.com (YU Guocai)
Abstract
R&D investment is enterprises’ strategy based on the market demand on innovative products and its production capacity for them. Enlarging market demand would spur the enterprises’ R&D input and the enhancement of technology state in production ability could have a complex effect on less developed countries’ R&D expenditure. With the measurement of China’s technology state compared to the United States and Japan, this paper explores with the state space model the dynamic effects of determinants on China’s R&D expenditure with the data during 1987–2006. The result illustrates that the growing national income, a proxy of domestic market demand, impedes the further R&D investment in China due to the enormous demand for necessities dominated by lower income class, and the income inequality is the major incentive for R&D investment via the higher pricing on the wealthy group, and that the improvement of technology state reduces the innovation risk and plays an important role in stimulating R&D expenditure.
R&D , effective demand , technology state , state space model
LI Ping, YU Guocai. The dynamics of China’s expenditure on R&D. Front Econ Chin, 2009, 4(1): 97‒109 https://doi.org/10.1007/s11459-009-0006-3
