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Using data from 1986-2005,the present paper estimates the impact of direct knowledgespilled over from G-7 countries on China’s economy.We use telephone line penetrationrates and personnel flows to estimate the direct spillover effect.Our results show that directknowledge spillovers through telecommunication networks and personnel flows areimportant components of international R&D spillovers in China.These direct channels ofspillover effectively accelerate China’s economic growth.Therefore,China should investmore in human capital and in its telecommunication network to enhance the absorptivecapacity of direct R&D spillovers,and to increase communication with other nations,inparticular the USA and Japan.More subsidies to domestic R&D research and purchase ofintermediate goods will help to raise China’s R&D intensity.
Using data from 1986-2005, the present paper estimates the impact of direct knowledgespilled over from G-7 countries on China’s economy. We use telephone line penetrationrates and personnel flows to estimate the direct spillover effect. Our results show that directknowledge spillovers through telecommunication networks and personnel flows areimportant components of international R & D spillovers in China.These direct channels ofspillover and accelerated china’s economic growth.Therefore, China should investmore in human capital and in its telecommunication network to enhance the absorptive capacity of direct R & D spillovers, and to increase communication with other nations, inparticular the USA and Japan .More subsidies to domestic R & D research and purchase ofintermediate goods will help to raise China’s R & D intensity.