The Effect of Innovation on Industrial Value-added in China

Abstract: China has achieved great economic growth since the reform in 1978. China’s industry has been developed significantly along with the economic advancement during the decades. The innovation has been argued by researchers to contribute to the economic growth. Since the industry output grows and contributes to the Chinese economic performance, the issue about how the innovation affects the industry in China deserves exploration. The granted patent has been always an indicator of the level of technological innovation in a country. The author intends to explore the extent that the innovations effect the value-added of industries in China. The main approach is to analyze the econometric relationship between the annual amounts of granted patents and the annual value-added per capita among various industrial sectors in China between 1986 and 2006.