Indigenous versus foreign innovation and energy intensity in China

This paper empirically investigates the roles of indigenous and foreign innovations in the development of technology spillovers originating from foreign direct investments, exports and imports on the energy intensity across China's 30 provinces for the period 2000-2013. The Driscoll-Kraay standard error estimator is first used to tackle the problems of heteroscedasticity and serial correlations in the models, and further discussion with a panel cointegration analysis is employed to confirm the estimates. The results indicate that indigenous innovations play a more important effect on energy intensity than foreign innovations. However, the panel threshold analysis indicates that the effects of foreign innovations on the energy intensity across China depend on the technological absorptive capacity affecting factors such as local research and development investment and human capital stock.