Research Clusters and Technology Diffusion

Much of the debate over income convergence hinges on whether technology diffusion is “global” or “local”. In this paper, I address this question in a developing country setting and focus on the role of major research clusters in promoting domestic technology diffusion. I identify four de facto research centers in China and investigate whether the effect of R&D spillovers from these research clusters is related to both geographic and technological distances. I find that firms’ productivity gains from R&D spillovers from the research cluster decline with (i) increasing geographic distance away from the research cluster, and (ii) the technological gap between technology senders and recipients.