Marching to the Beat of Their Own Drum: Determinants of Innovation for China and OECD

Abstract

This study uses a fixed-effects linear regression and an array of specifications to highlight significant determinants of innovation for China and the members of the OECD. The treatments include: FDI, IP enforcement, Internet use, and urbanization rate. I also test across two different time periods: 1995 to 2005 and 1995 to 2013. The time periods selected are characterized by a technological revolution, two major recessions, and the rise of China. The effect that these qualities had on the innovation determinants was recorded and discussed. I also interact the variables for urbanization and Internet-use to test my hypothesis that the two determinants wean influence from each other in the patent-production process. The hypothesis was found to be true in China. In my discussion, I stress the skill of Chinese policymakers in implementing precise, effective methods that most efficiently grow their country’s rate of innovation.