Does Technology Transfer Facilitate Technological Progress? Evidence from China

This paper empirically investigates the impact of technology transfer which consists of imports of technology and purchase of domestic technology on total factor productivity for a cross sectional sample of large and medium-sized industrial enterprises by 30 major provinces or regions in China. The possible determinants of total factor productivity are sought with special focus on technology transfer. An endogeneity test is performed in order to examine whether inconsistent results exist or not. Empirical results indicate that technology transfer, the level of R&D and human capital are the most significant factors enhancing total factor productivity in Chinese industries. The findings in this paper support the argument that accelerating technology transfer is an effective way of facilitating technology progress in China.