Working Paper: CEPR ID: DP16980
Authors: Michela Giorcelli; Bo Li
Abstract: This paper studies the long-term effects of technology and know-how transfers on structural transformations. In the 1950s, the Soviet Union supported the construction of 156 Projects, large-scale capital-intensive industrial clusters in China, and sponsored a physical capital transfer providing state-of-the-art machinery and equipment; and a know-how transfer through training for engineers and production supervisors. We use newly-assembled data that follow these plants for over four decades, combined with natural variation in the transfers they eventually received. We find that know-how transfer had permanent effects on output quantity and quality, increased domestic technology development, and exports to the Western world when China engaged in international trade. By contrast, receiving only Soviet capital goods had smaller effects that faded out over time, especially after China’s opening to trade. The intervention generated horizontal and vertical spillovers, as well as production reallocation from state-owned to privately owned companies since the late 1990s.
Keywords: industrialization; technology transfer; knowhow diffusion; China
JEL Codes: L2; M2; N34; N64; O32; O33
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Soviet knowhow transfers (P33) | quality of steel (L61) |
| Soviet physical capital transfers (F16) | plant performance (D29) |
| Soviet knowhow transfers (P33) | plant performance (D29) |
| Soviet physical capital transfers (F16) | cumulative output increase (E23) |