The relative contributions of foreign technology and domestic inputs to innovation in Chinese manufacturing industries

Data from 29 Chinese manufacturing industries over five years were used to test the relative importance of traditional predictors of innovative output compared to borrowing of foreign technology. We find on the basis of the proportion of new product sales to total sales, that the most innovative industries couple investments in both R&D personnel and technology imports rather than relying on either input alone. These findings suggest that, in developing economies, innovation is driven by the synergy between investment in absorptive capacity (most importantly, their R&D personnel) and investment in sources of new knowledge (foreign technology). (C) 1997 Elsevier Science Ltd.