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Seoul Journal of Economics - Vol. 27 , No. 2
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Seoul Journal of Economics - Vol. 27, No. 2, pp. 149-170
Abbreviation: SJE
ISSN: 1225-0279 (Print)
Print publication date 30 May 2014
Received 13 Sep 2013 Revised 17 Jan 2014 Accepted 23 Jan 2014

Innovation and Spillovers in China: Spatial Econometric Approach
Sungho Rho ; Ikjoon Moon
Assistant professor, Chinese trade and commerce, Sejong University, Seoul, Korea, Tel: ＋82-2-3408-4380, Fax: ＋82-2-3408-4309 (sunghorho@sejong.ac.kr)
Associate research fellow, Korea Institute for International Economic Policy, Seoul, Korea, Tel: ＋82-2-3460-1024 (ijmoon@kiep.go.kr)

JEL Classification: O3, P2

Abstract

This paper examines spatial dependence in China’s regional innovation using the spatial econometric approach. Dataset covers 30 Chinese provinces for the period from 2000 to 2009. The main findings are as follows: First, an interdependent and simultaneous influential relation in regional innovation is observed in most of the spatial panel models. Second, R&D activity significantly affects regional innovation. The effect of entrepreneurial activity on innovation is generally lower than that of R&D. In addition, the indirect spillover effect of R&D activity and entrepreneurial activity among adjacent provinces is limited. Third, the spillover effect of R&D and entrepreneurial activity among provinces diminishes with distance based on the regression analysis that formulated spatial weight matrixes for three different range segments. That is, the spillover effect of entrepreneurial activity is limited by spatial proximity, and the spillover effect of R&D activity is attenuated by the increase in distance.

Keywords: Innovation, R&D activity, Entrepreneurial activity, Spatial panel data model, China
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