Econometrica

Journal Of The Econometric Society

An International Society for the Advancement of Economic
Theory in its Relation to Statistics and Mathematics

Edited by: Guido W. Imbens • Print ISSN: 0012-9682 • Online ISSN: 1468-0262

Econometrica: Jul, 2022, Volume 90, Issue 4

From Imitation to Innovation: Where Is all that Chinese R&D Going?

https://doi.org/10.3982/ECTA18586
p. 1615-1654

Michael König, Kjetil Storesletten, Zheng Song, Fabrizio Zilibotti

We construct an endogenous growth model with random interactions where firms are subject to distortions. The TFP distribution evolves endogenously as firms seek to upgrade their technology over time either by innovating or by imitating other firms. We use the model to quantify the effects of misallocation on TFP growth in emerging economies. We structurally estimate the stationary state of the dynamic model targeting moments of the empirical distribution of R&D and TFP growth in China during the period 2007–2012. The estimated model fits the Chinese data well. We compare the estimates with those obtained using data for Taiwan and perform counterfactuals to study the effect of alternative policies. R&D misallocation has a large effect on TFP growth.


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Supplemental Material

Supplement to "From Imitation to Innovation: Where Is all that Chinese R&D Going?"

König, Michael, Kjetil Storesletten, Zheng Song and Fabrizio Zilibotti

This zip file contains the replication files for the manuscript.  It also contains an additional web appendix for the manuscript.

Supplement to "From Imitation to Innovation: Where Is all that Chinese R&D Going?"

König, Michael, Kjetil Storesletten, Zheng Song and Fabrizio Zilibotti

This online appendix contains material not found within the manuscript.

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