Technological development, technology spillover and profitability: An industry level empirical analysis of Chinese manufacturing industries

In this paper, we use industry level panel data regression models to examine the technology spillovers from large- and medium-sized enterprises (LMEs) into non-LMEs, as well as from state-owned LMEs into state-owned enterprises and non-state-owned enterprises, in Chinese manufacturing industries. Our study reveals that technological developments in LMEs have a technology spillover effect upon non-LMEs, and state-owned LMEs have a strong technology spillover effect upon both state-owned and non-state-owned enterprises in manufacturing industries with below average technological capital intensity. As the agents of knowledge diffusion and providers of technological public goods, state-owned LMEs have played a critical role in bridging the technology gap between advanced technologies brought in by foreign funded enterprises and the technological base of other local firms, and thus have facilitated the assimilation and adaptation of advanced foreign technologies in the development of the Chinese manufacturing industry.