© institute for fiscal studies how long before china joins the us at the technological frontier?...
Post on 22-Dec-2015
215 views
TRANSCRIPT
© Institute for Fiscal Studies
How long before China joins the US at the technological frontier?
Rachel Griffith
Helen Miller
Motivation • Increasing evidence of the rise of innovative activities in
China
• Academic literature: China far from technology frontier
• Public perception: China has increasingly important role at the technological frontier
© Institute for Fiscal Studies
Motivation • Increasing evidence of the rise of innovative activities in
China– Striking increase in R&D spending – Also in other inputs, skilled workers– Increase in outputs including patenting
• Academic literature: China far from technology frontier
• Public perception: China has increasingly important role at the technological frontier
© Institute for Fiscal Studies
Business expenditure on R&D as a percentage of GDP
© Institute for Fiscal Studies
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
0
0.5
1
1.5
2
2.5
3
China France Germany Japan
UK United States OECD Total
Motivation • Increasing evidence of the rise of innovative activities in
China– Striking increase in R&D spending – Also in other inputs, skilled workers– Increase in outputs including patenting
• Academic literature: China far from technology frontier
• Public perception: China has increasingly important role at the technological frontier
© Institute for Fiscal Studies
Motivation • Increasing evidence of the rise of innovative activities in
China
• Academic literature: China far from technology frontier– Puga and Trefler (2010); emphasise largely incremental
innovation – Thursby and Thursby (2006) and von Zedtwitz and
Gassmann (2002); survey evidence that ‘research’ part of R&D still conducted outside China
– Branstetter and Foley (2007); conclude that China is “far from becoming a technological superpower”.
– Exception: Zhou and Leydesdorff (2006), increase scientific papers
• Public perception: China has increasingly important role at the technological frontier
© Institute for Fiscal Studies
Motivation • Increasing evidence of the rise of innovative activities in
China
• Academic literature: China far from technology frontier
• Public perception: China has increasingly important role at the technological frontier– recent survey in Newsweek showed that only 41% of
Americans believed that the US is staying ahead of China in terms of Innovation.
– “We’ll provide new technology and new training for teachers so that students in Chicago and Boston can compete with kids in Beijing for the high-tech, high-wage jobs of the future," (President Obama 2009)
– Anecdotal evidence that foreign firms are increasingly setting up facilities in China to perform cutting-edge research
© Institute for Fiscal Studies
Paper• Descriptive paper; patents of Chinese firms/inventors
• Provide evidence on the role of Chinese firms and inventors in knowledge production. – Use patent citations to consider type of activity
• See: – Growth Chinese activity puts it in striking distance of US – Chinese are involved in basic/near science research– Part of this trend is the result of western European
multinationals
© Institute for Fiscal Studies
Trends in Patenting; China approaching the US • World Intellectual Property Office (WIPO) figures
– Chinese applicants rank fifth for number of PCT patent applications (behind US, Japan, Germany and Korea)
– Huawei Technologies, was the second largest filer of PCT applications in 2009 (in 2008 it was the largest)
• How long would it take before the number of applications filed by a Chinese applicant was equally to the number filed by a US applicant? Alternative scenarios : – Growth matches 5 years to 2009 => 2015
• 35% growth Chinese applicants + 0% growth US applicants
– Less optimistic => 2034• 10% growth Chinese applicants + 2.5% growth US applicants
• Data EPO, USPTO and SIPO corroborate this picture
© Institute for Fiscal Studies
Patents filed by Chinese applicants and Chinese inventors
© Institute for Fiscal Studies
1990
1992
1994
1996
1998
2000
2002
2004
0
500
1000
1500
2000
2500
3000
3500USPTO
Granted; Chinese applicantsGranted; Chinese inventorApplication; Chinese ap-plicantsApplication; Chinese inven-tor
1990
1992
1994
1996
1998
2000
2002
2004
0
20000
40000
60000
80000
100000SIPO
1990
1992
1994
1996
1998
2000
2002
2004
2006
0
500
1000
1500
2000 EPO
Chinese at the leading edge of technology?• Literature has placed emphasis on incremental activity
and small scale • Fiscal incentives likely to encourage low quality
patenting in China– Reductions in tax, increased probability of contracts,
bonuses related to number of patents
• EPO patent applications (PATSTAT)– Expect higher average quality that SIPO– Remove home biases US and Chinese firms
• Use information on the citations to non-patent literature– Consider patent applications that cite a paper in the
scientific literature (non-patent literature) to represent ideas that are closer to the science base (near science)
© Institute for Fiscal Studies
Near science applications; which baseline? • Much of increase in EPO patenting in recent decades has been
due to low quality patents – share of EPO applications that cite scientific literature has declined
from 35% in 1995 to 12% in 2005.
• Similar pattern for patent applications which have at least one US inventor
• Very different for those applications with at least one Chinese inventor – associated with a share of near science applications which is both
higher and has declined less rapidly.
• In 2005 a larger proportion of applications with Chinese applicants are near science (24%) than is the case for all EPO applications (12%) or those with US applicants (8%).
© Institute for Fiscal Studies
Share of EPO patent applications that are near science
© Institute for Fiscal Studies
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 20050
5
10
15
20
25
30
35
40
45
All EPO at least one US inventorat least one Chinese inventor
Share of EPO patent applications that are near science
© Institute for Fiscal Studies
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 20050
5
10
15
20
25
30
35
40
45
All EPO at least one US inventorat least one Chinese inventor
Growth in number near science EPO applications
© Institute for Fiscal Studies
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005-40%
-20%
0%
20%
40%
60%
80%
all EPO at least one US inventorat least one Chinese inventor
© Institute for Fiscal Studies
Research teams• Increasing prevalence of team-based research.
– Wuchty et al (2007) - trend towards multiple inventors– Greater emphasis on team work as innovation gets harder to
produce (Jones (2009)) and as collaboration becomes cheaper (Agrawal and Goldfarb (2008))
• Suggestions in the literature that inventors in emerging economies are more likely to work in international teams– teams are a mechanism to control for inferior expertise
(Branstetter and Foley (2007)) and/or – may facilitate the movement of knowledge within multinational
companies. (Singh (2005))
• More collaboration when involved in creating near science technologies?
© Institute for Fiscal Studies
Proportion of patents, by research team
China US China US0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Non collabora-tive
Near science Not near science
Collaborative: inventors in more than
one country
© Institute for Fiscal Studies
Proportion of patents, by research team
China US China US0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Non collabora-tive
Near science Not near science
Collaborative: inventors in more than
one country
© Institute for Fiscal Studies
Proportion of patents, by research team
China US China US0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Inventors all in same country
Single inventor
Collaborative (no home)
Collaborative (home)
Near science Not near science
Collaborative home: inventors in more
than one country, with at least one in the
same country as the applicant.
A tale of (at least) two perspectives • Evidence that Chinese inventors/firms involved in research at
technology frontier
For China: • Innovation important driver of growth, benefits from increase in
innovation and near science research (inc FDI)
For the West: • Not zero sum game; many benefits • Many concerns; China as source of competition in both product
market and labour market (related to investment by western firms)
© Institute for Fiscal Studies
A tale of (at least) two perspectives • Evidence that Chinese inventors/firms involved in research at
technology frontier
For China: • Innovation important driver of growth, benefits from increase in
innovation and near science research (inc FDI)
For the West: • Not zero sum game; many benefits
– New markets for goods and services – Access to skilled workers or technologies, potentially at lower cost. – Gains from trade, both directly through improved performance
(technical change) and indirectly if knowledge is transmitted back to the home country.
• Many concerns; China as source of competition in both product market and labour market (related to investment by western firms)
© Institute for Fiscal Studies
A tale of (at least) two perspectives • Evidence that Chinese inventors/firms involved in research at
technology frontier
For China: • Innovation important driver of growth, benefits from increase in
innovation and near science research (inc FDI)
For the West: • Not zero sum game; many benefits • Many concerns; China as source of competition in both product
market and labour market (related to investment by western firms)– Lose jobs – Fall behind technologically – Lose geographically localised spillovers
© Institute for Fiscal Studies
Western European multinationals innovating in China (and other emerging economies)• Part of increase in Chinese innovation driven by
investment of foreign multinationals
• Multinational firms carry out an increasing share of their innovative activities in emerging countries– 2010 report by Ernst and Young: China, Eastern Europe and
India are reportedly perceived to be the most attractive regions for FDI over the next three years.
– World 2025 report – India and China set to be main destinations for business R&D by 2025
• Look specifically at this; use patents data (PATSTAT) matched to accounts data (Amadeus) - to what do western multinationals locate in emerging economies and how do they organise their activities there?
© Institute for Fiscal Studies
Number of EPO patent applications with at least one Chinese inventor, by applicant country
© Institute for Fiscal Studies
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 20050
200
400
600
800
1000
1200
1400
1600
1800
2000Other applicantsUS applicantsWestern European ap-plicants
© Institute for Fiscal Studies
Inventors in emerging economies
• Firms still keep most activity at home or in other developed economies
• Differences across firm country– French and Dutch firms are associated with proportionally more
Chinese inventors
• Heterogeneity across firms – Many patenting firms file no patents listing Chinese inventors,
others conduct a significant share activity there– Proportionately more Chinese inventors working on
Communications and Computing technologies (use Derwent Innovation Index to define technologies)
© Institute for Fiscal Studies
Research teams
• More likely to be a collaborative research team when inventors in emerging economies
China Eastern Europe
India US0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Single Inventor
All inventors in same country
Alongside inventor in another country
Alongside inventor in home country
Pro
port
ion o
f pate
nt
applicati
ons
© Institute for Fiscal Studies
Research teams
• More likely to be a collaborative research team when inventors in emerging economies
• Not a clear relationship with near science research
China US China US0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%Inventors all in same countrySingle inventorCollaborative (no home)Collaborative (home)
Near science Not near science
© Institute for Fiscal Studies
Research teams
• More likely to be a collaborative research team when inventors in emerging economies
• Not a clear relationship with near science research
China US China US0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%Inventors all in same countrySingle inventorCollaborative (no home)Collaborative (home)
Near science Not near science
© Institute for Fiscal Studies
Intellectual property rights• Subsidiaries holding the intellectual property that is created
with inventors in emerging economies are most often at home (or other Western countries, US)
• Well documented that Intellectual Property (IP) regimes in emerging economies are not as strong as those in Western Europe and the US
• The International Property Rights index (IPRI) , 2010 – China ranks in the third quintile of the world intellectual property
rights ranking;
• Zhao (2006) provides evidence that large multinational firms use internal mechanisms to protect their IP, and thus overcome the market failure of poor institutions.
© Institute for Fiscal Studies
Conclusions
• Continuation of current trends could see Chinese inventors create as many patents as US inventors
• Evidence that Chinese inventors are involved in near science research – both when working for Chinese firms and European firms
• Type of activity matters for likely impact on west– More advanced => closer substitutes
© Institute for Fiscal Studies
Firm Subsidiary Total China
Firm Subsidiary Total China
Koninklijke Philips Electronics NL 11436 155 BASF AG DE 3505 49Koninklijke Philips Electronics NL 9780 154 BASF SE DE 2437 45Philips intellectual property and standards DE 1361 1
BASF AG & BASF coatings AG DE 773 4
Siemens AG DE 7739 36Telefonaktiebolaget LM Ericsson SE 3167 21
Patent-treuhand-gesellschaf DE 407 19
Telefonaktiebolaget LM Ericsson SE 2192 20
Siemens AG DE 6061 13 Ericsson AB SE 191 0Robert Bosch GmbH DE 7161 17 Alcatel lucent FR 2836 63Robert Bosch GmbH DE 5706 14 Alcatel lucent & Alcatel FR 2626 62BSH Bosch und Siemens Hausgeräte GmbH. DE 1331 3
Tcl & Alcatel mobile phone ltd CN 17 1
Nokia corporation FI 3705 88 Thomson multimedia FR 2354 94Nokia corporation FI 3597 85 Thomson licensing FR 2309 93Nokia inc. US 84 3 Nextream France FR 13 1
Firms with at least one Chinese inventor; listed in order of total patent applications, 2001-2005. Firms in blue are the parent firm, those below the
largest patenting subsidiaries (country codes in adjacent column).