Social Sciences in China 2014

Vol. 35, No. 2, 2014

Internal Drivers and the Specialization Status of Under-developed Countries: Evidence from China’s High-tech Industry

(Abstract)

Yang Gaoju and Huang Xianhai

This study incorporates value-added ratio (VAR) and productivity into the analytical framework of intra-product specialization (IPS) as a globally comparable index for international specialization status (ISS), to analyze the effect of domestic technological innovation, labor force investment, capital investment and foreign direct investment (FDI) spillovers on the ISS of developing countries. It also tests the effects empirically against the data from Chinese high-tech industries and enterprises. The results show that domestic technological innovation and the improved coordination of material capital and human capital are key internal drivers in the improvement of the ISS of Chinese high-tech industries, whereas FDI spillovers play a relatively limited role therein. Therefore, the key to China’s industry upgrading is to tap and nurture the internal motive forces rather than to rely on FDI spillovers.