International technology sourcing between a developing country and the rest of the world. A case study of China

Developing countries are increasingly seen as competitors in knowledge intensive activities. However, their rapidly growing innovation potential suggests that they will become important producers of technology demanded by other countries, and at the same time, they will increase their demand for technology produced elsewhere. To study the evolution, composition and drivers of international technology sourcing between a developing country and the rest of the world, we look at the case of China. To quantify these technology flows we use patent-based measures of cross-border ownership of inventions and a patent database providing worldwide coverage of patents. We show that although China has a large deficit in international technology sourcing, the flow of technology from abroad to China and vice versa is intensifying. In both directions of technology sourcing, we observe strong concentration in terms of partners and technological fields. While geographic distance hinders the technology flow from China to other countries, it does not impede Chinese entities from acquiring property rights over inventions developed by inventors from distant countries. China maintains intensive linkages with a number of relatively small and developing countries. This way it accelerates the process of South-South interactions in international technology sourcing.