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Frontiers of Economics in China

ISSN 1673-3444

ISSN 1673-3568(Online)

CN 11-5744/F

Postal Subscription Code 80-978

Front Econ Chin    2009, Vol. 4 Issue (1) : 97-109
research-article |
The dynamics of China’s expenditure on R&D
LI Ping, YU Guocai()
School of Economics, Shandong University of Technology, Zibo 255049, China
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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.

Keywords R&D      effective demand      technology state      state space model     
Corresponding Authors: YU Guocai,   
Issue Date: 05 March 2009
 Cite this article:   
LI Ping,YU Guocai. The dynamics of China’s expenditure on R&D[J]. Front Econ Chin, 2009, 4(1): 97-109.
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