Impact of Chinese, Korean and Japanese Innovation Spillover on Labour Productivity in South African Manufacturing

  • Brian Tavonga Mazorodze University of Zululand
  • Devi Datt Tewari University of Zululand


Open economy endogenous growth theories consider physical intermediate imports as a channel through which innovation spreads across international boundaries. We build from this literature and contribute by considering trade in services as the channel through which innovation from China, Korea and Japan influences labour productivity in South Africa’s manufacturing sector between 1995Q1 – 2017Q4. Unlike previous studies, we also compute a composite innovation index using the principal component analysis. Results from the autoregressive distributed lag model are supportive of open economy endogenous growth theories for Japan and Korea. However, for China, the effect is significantly negative adding further concerns over its predatory presence in South Africa.  


Download data is not yet available.


Acharya, R. C. & Keller, W. (2009). Technology Transfer Through Imports. Canadian Journal of Economics/Revue canadienne d'économique, 42(4), 1411-1448. Ahmed, G., Arshad Khan, M. & Afzal, M. (2015). Trade Liberalization and Industrial Productivity: Evidence from Pakistan. Alvarez, R. & Lopez, R. A. (2005). Exporting and Performance: Evidence from Chilean Plants. Canadian Journal of Economics/Revue canadienne d'économique, 38(4), 1384-1400. Arnold, J., Nicoletti, G. & Scarpetta, S. (2011). Regulation, Resource Reallocation and Productivity Growth. Nordic Economic Policy Review, 2, 61-94. Arnold, J. M., Javorcik, B., Lipscomb, M. & Mattoo, A. (2016). Services Reform and Manufacturing Performance: Evidence from India. The Economic Journal, 126(590), 1-39. Apergis, N., Economidou, C. & Filippidis, I. (2008). Innovation, Technology Transfer and Labor Productivity Linkages: Evidence from a Panel of Manufacturing Industries. Review of World Economics, 144(3), 491-508. Aghion, P. & Howitt, P. (1990). A Model of Growth Through Creative Destruction (No. w3223). National Bureau of Economic Research. Asongu, S. A. & Aminkeng, G. A. (2013). The economic consequences of China–Africa Relations: Debunking Myths in the Debate. Journal of Chinese Economic and Business Studies, 11(4), 261-277. Badinger, H. & Egger, P. (2016). Productivity Spill over across Countries and Industries: New evidence from OECD countries. Oxford Bulletin of Economics and Statistics, 78(4), 501-521. Balchin, N., Hoekman, B. M., Martin, H., Mendez-Parra, M., Papadavid, P. & Te Velde, D. W. (2016). Trade in Services and Economic Transformation. Behera, S. R., Dua, P. & Goldar, B. (2012). Foreign Direct Investment and Technology Spillover: Evidence Across Indian Manufacturing Industries. The Singapore Economic Review, 57(02), 1250011. Bloom, N., Draca, M. & Van Reenen, J. (2016). Trade Induced Technical Change? The Impact of Chinese Imports on Innovation, IT and Productivity. The Review of Economic Studies, 83(1), 87-117. Coe, D. T. & Helpman, E. (1995). International R&D Spillover. European Economic Review, 39(5), 859-887.
Diaw, D. & Lessoua, A. (2013). Natural Resources Exports, Diversification and Economic Growth of CEMAC countries: On the Impact of Trade with China. African Development Review, 25(2), 189-202. Duggan, V., Rahardja, S. & Varela, G. (2013). Service Sector Reform and Manufacturing Productivity: Evidence from Indonesia. Elu, J. U. & Price, G. N. (2010). Does China Transfer Productivity Enhancing Technology to Sub‐Saharan Africa? Evidence from Manufacturing Firms. African Development Review, 22(s1), 587-598. Eschenbach, F. & Hoekman, B. (2006). Services Policies in Transition Economies: on the EU and WTO as Commitment Mechanisms. World Trade Review, 5(3), 415-443. Feldman, M. P. & Kogler, D. F. (2010). Stylized Facts in the Geography of Innovation. Handbook of the Economics of Innovation, 1, 381-410. Fernandes, A. M. & Paunov, C. (2012). Foreign Direct Investment in Services and Manufacturing Productivity: Evidence for Chile. Journal of Development Economics, 97(2), 305-321. Francois, J. F. (1990). Trade in Producer Services and Returns due to Specialization under Monopolistic Competition. Canadian Journal of Economics, 109-124. Goldberg, P. K., Khandelwal, A. K., Pavcnik, N. & Topalova, P. (2010). Multiproduct Firms and Product Turnover in the Developing World: Evidence from India. The Review of Economics and Statistics, 92(4), 1042-1049. Griliches, Z. & Lichtenberg, F. (1984). Interindustry Technology Flows and Productivity Growth: A Reexamination. The Review of Economics and Statistics, 324-329. Grossman, G. M. & Helpman, E. (1991). Trade, Knowledge Spillover, and Growth. European Economic Review, 35(2-3), 517-526. Guellec, D. & Van Pottelsberghe de la Potterie, B. (2004). From R&D to Productivity Growth: Do the Institutional Settings and the Source of Funds of R&D matter? Oxford Bulletin of Economics and Statistics, 66(3), 353-378. Guerrieri, P. & Meliciani, V. (2005). Technology and International Competitiveness: The interdependence between Manufacturing and Producer Services. Structural Change and Economic Dynamics, 16(4), 489-502. Hall, B. H. & Rosenberg, N. (2010). Handbook of the Economics of Innovation, Elsevier. Industrial Development Cooperation. (2009). Trends in South African Manufacturing Production, Employment and Trade, Department of Research and Information, Fourth Quarter. Kasahara, H. & Rodrigue, J. (2008). Does the use of Imported Intermediates Increase Productivity? Plant-level evidence. Journal of Development Economics, 87(1), 106-118. Keller, W. (2002). Trade and the Transmission of Technology. Journal of Economic growth, 7(1), 5-24. Lee, G. (2006). The Effectiveness of International Knowledge Spillover Channels. European Economic Review, 50(8), 2075-2088. Levine, R. (1997). Financial Development and Economic Growth: Views and Agenda. Journal of Economic Literature, 35(2), 688-726. Lichtenberg, F. R. & De La Potterie, B. V. P. (1998). International R&D Spill over: a comment. European Economic Review, 42(8), 1483-1491. Mattoo, A., Rathindran, R. & Subramanian, A. (2006). Measuring Services Trade Liberalization and its Impact on Economic Growth: An illustration. Journal of Economic Integration, 64-98. Medda, G. & Piga, C. A. (2014). Technological Spillover and Productivity in Italian Manufacturing Firms. Journal of productivity analysis, 41(3), 419-434. Mehta, S. (2013). Technology Spillover and Productivity: Analysis of the Indian Manufacturing Sector. Innovation and Development, 3, 55-69. Melitz, M. J. (2003). The Impact of Trade on Intra‐Industry Reallocations and Aggregate Industry Productivity. Econometrica, 71(6), 1695-1725. Mun, S. B. & Nadiri, M. I. (2002). Information Technology Externalities: Empirical Evidence from 42 US Industries (No. w9272). National Bureau of Economic Research. Narayan, P. (2004). Reformulating Critical Values for the Bounds F-statistics Approach to Cointegration: An Application to the Tourism Demand Model for Fiji (Vol. 2). Australia: Monash University. Nishioka, S. (2013). R&D, Trade in Intermediate Inputs, and the Comparative Advantage of Advanced Countries. Journal of the Japanese and International Economies, 30, 96-110. OECD. (2010). Measuring Innovation: A New Perspective.
Pesaran, M. H. & Smith, R. P. (1998). Structural analysis of co integrating VARS. Journal of Economic Surveys, 12(5), 471-505. Pesaran, M. H., Shin, Y. & Smith, R. J. (2001). Bounds Testing Approaches to the Analysis of Level Relationships. Journal of Applied Econometrics, 16(3), 289-326. Piermartini, R. & Rubínová, S. (2014). Knowledge Spill Over Through International Supply Chains (No. ERSD2014-11). WTO Staff Working Paper. Potterie, B. V. P. D. L. & Lichtenberg, F. (2001). Does Foreign Direct Investment Transfer Technology Across Borders? Review of Economics and Statistics, 83(3), 490-497. Pradeep, V., Bhattacharya, M. & Chen, J. R. (2017). Spillover Effects of Research and Development, Exports and Foreign Investment on Productivity: Empirical Evidence from Indian Manufacturing. Journal of South Asian Development, 12(1), 18-41. Raouf Abdel Fattah, E. (2015). Total Factor Productivity and Technology Spillover in Egypt. Middle East Development Journal, 7(2), 149-159. Renard, M. F. (2011). China’s Trade and FDI in Africa. China and Africa: An emerging partnership for development, 25. Romer, P. M. (1989). Increasing Returns and New Developments in the Theory of Growth (No. w3098). National Bureau of Economic Research. Roquia Fane Madouka Koumou, Wang Manyi. (2016). Effects of Chinese Foreign Direct Investment in Africa. Journal of Finance and Accounting, 4(3), 131-139. Schmookler, J. (1966). Invention and Economic Growth, Cambridge, MA; Harvard University Press. Stock, J. H. & Watson, M. W. (1993). A Simple Estimator of Cointegrating Vectors in Higher Order Integrated Systems. Econometrica: Journal of the Econometric Society, 783-820. Park, J. Y. (1992). Canonical Cointegrating Regressions. Econometrica: Journal of the Econometric Society, 119-143. Phillips, P. C. & Hansen, B. E. (1990). Statistical Inference in Instrumental Variables Regression with I (1) Processes. The Review of Economic Studies, 57(1), 99-125. Terleckyj, H. (1974). Effects of R&D on the Productivity Growth of Industries: An Exploratory National Planning Association, Washington, D.C.
How to Cite
MAZORODZE, Brian Tavonga; TEWARI, Devi Datt. Impact of Chinese, Korean and Japanese Innovation Spillover on Labour Productivity in South African Manufacturing. Journal of Economics and Behavioral Studies, [S.l.], v. 10, n. 5, p. 16-28, nov. 2018. ISSN 2220-6140. Available at: <>. Date accessed: 21 jan. 2019. doi:
Research Paper