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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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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.
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Keywords
R&D
effective demand
technology state
state space model
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Corresponding Author(s):
YU Guocai,Email:eveecho@126.com
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Issue Date: 05 March 2009
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