Top Banner
© Institute for Fiscal Studies How long before China joins the US at the technological frontier? Rachel Griffith Helen Miller
31

© Institute for Fiscal Studies How long before China joins the US at the technological frontier? Rachel Griffith Helen Miller.

Dec 22, 2015

Download

Documents

Welcome message from author
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
Page 1: © Institute for Fiscal Studies How long before China joins the US at the technological frontier? Rachel Griffith Helen Miller.

© Institute for Fiscal Studies

How long before China joins the US at the technological frontier?

Rachel Griffith

Helen Miller

Page 2: © 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

Page 3: © 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– 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

Page 4: © Institute for Fiscal Studies How long before China joins the US at the technological frontier? Rachel Griffith Helen Miller.

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

Page 5: © 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– 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

Page 6: © 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– 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

Page 7: © 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– 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

Page 8: © Institute for Fiscal Studies How long before China joins the US at the technological frontier? Rachel Griffith Helen Miller.

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

Page 9: © Institute for Fiscal Studies How long before China joins the US at the technological frontier? Rachel Griffith Helen Miller.

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

Page 10: © Institute for Fiscal Studies How long before China joins the US at the technological frontier? Rachel Griffith Helen Miller.

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

Page 11: © Institute for Fiscal Studies How long before China joins the US at the technological frontier? Rachel Griffith Helen Miller.

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

Page 12: © Institute for Fiscal Studies How long before China joins the US at the technological frontier? Rachel Griffith Helen Miller.

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

Page 13: © Institute for Fiscal Studies How long before China joins the US at the technological frontier? Rachel Griffith Helen Miller.

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

Page 14: © Institute for Fiscal Studies How long before China joins the US at the technological frontier? Rachel Griffith Helen Miller.

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

Page 15: © Institute for Fiscal Studies How long before China joins the US at the technological frontier? Rachel Griffith Helen Miller.

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

Page 16: © Institute for Fiscal Studies How long before China joins the US at the technological frontier? Rachel Griffith Helen Miller.

© 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?

Page 17: © Institute for Fiscal Studies How long before China joins the US at the technological frontier? Rachel Griffith Helen Miller.

© 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

Page 18: © Institute for Fiscal Studies How long before China joins the US at the technological frontier? Rachel Griffith Helen Miller.

© 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

Page 19: © Institute for Fiscal Studies How long before China joins the US at the technological frontier? Rachel Griffith Helen Miller.

© 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.

Page 20: © Institute for Fiscal Studies How long before China joins the US at the technological frontier? Rachel Griffith Helen Miller.

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

Page 21: © Institute for Fiscal Studies How long before China joins the US at the technological frontier? Rachel Griffith Helen Miller.

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

Page 22: © Institute for Fiscal Studies How long before China joins the US at the technological frontier? Rachel Griffith Helen Miller.

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

Page 23: © Institute for Fiscal Studies How long before China joins the US at the technological frontier? Rachel Griffith Helen Miller.

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

Page 24: © Institute for Fiscal Studies How long before China joins the US at the technological frontier? Rachel Griffith Helen Miller.

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

Page 25: © Institute for Fiscal Studies How long before China joins the US at the technological frontier? Rachel Griffith Helen Miller.

© 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)

Page 26: © Institute for Fiscal Studies How long before China joins the US at the technological frontier? Rachel Griffith Helen Miller.

© 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

Page 27: © Institute for Fiscal Studies How long before China joins the US at the technological frontier? Rachel Griffith Helen Miller.

© 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

Page 28: © Institute for Fiscal Studies How long before China joins the US at the technological frontier? Rachel Griffith Helen Miller.

© 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

Page 29: © Institute for Fiscal Studies How long before China joins the US at the technological frontier? Rachel Griffith Helen Miller.

© 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.

Page 30: © Institute for Fiscal Studies How long before China joins the US at the technological frontier? Rachel Griffith Helen Miller.

© 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

Page 31: © Institute for Fiscal Studies How long before China joins the US at the technological frontier? Rachel Griffith Helen Miller.

© 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).