KNOWLEDGE FLOWS IN CHINA : A PATENT CITATIONS ANALYSIS Presented

Knowledge Flows Within China: A Patent Citation Analysis Name: Jia LIU Affiliation: Universite de Strasbourg Faculte des Sciences Economiques et de Gestion Bureau d'Economie Theorique et Applique Year of enrollment: 2018 Expected final date: 2021 E-mail: jialiu@unistra.fr 1) Existing state-of-the-art Krugman (1991) emphasizes the importance of knowledge spillover, and he thinks knowledge spillover is hard to track. He has argued, ? Knowledge flows are invisible; they leave no paper trail by which they may be measured and tracked? Scholars generally think that knowledge spillover is an invisible process and its trajectory is difficult to track. Nonetheless, Jaffe(1993) first use the patent citation as a proxy of the knowledge flow. They find that patent citations can be used as an ? article trail? to measure and track the knowledge spillover. Based on Jaffe’s work, numerous studies start to apply patent data to measure the direction of knowledge spillovers. Criscuolo et al. (2005) use patent citation data from the EU Patent Office to quantify the relative asset augmenting and exploiting character of foreign-located R&D. Criscuolo and Verspagen (2008) try to combine the EPO and the USPTO patent citation data to observe knowledge flows. 2) Research Gap and Research Question The most difficult issue in using patent citation data is the patent data collecting process itself. The novelty of our study lies in that in the existing studies, there is no empirical study of using patent citation to analyze knowledge flows within China at the provincial-level administrative unit level up to now. The patents granted by Chinese Patent Office don’t contain the patent citations information. The United States is China’s most important destination country for foreign invention patent applications, most literature use USPTO to get the citation information. The traditional way of getting citation data is from the NBER. However, the NBER only contain the patents granted between 1963 and 2006. Until 2006, the number of patent applicated by China is small and the number of intra-national citation is much smaller. For the reason above, there is no empirical study of using patent citation to analyze knowledge flows within China. Our key research question has been to examine whether geographical distance, provincial level administrative unit borders knowledge spillovers in China. We also investigate the extent to which knowledge spillovers are confined to regions with particular technological specialization. This paper focuses on the empirical study of the knowledge spillovers in China's provinces, and can more accurately grasp the direction and extent of knowledge spillovers in Chinese provinces by quantitative analysis. 3) Theoretical Arguments We construct a model of knowledge spillovers between province-level administrative units and several empirical explanatory variables. In our study, the number of patent citations between two provinciallevel administrative units as the dependent variable, and we regard geographical distance and province level administrative borders are the main explanatory variables, while other variables, such as technological proximity is also included in the model. 4) Method and Data The citation distribution between province-level administrative units is highly skewed, and many values are zero and small. In addition, patent citation data is count data and appears as an integer. Considering these characteristics of the data, the model is estimated by Tobit regression and negative binomial regression to conduct quantitative studies on relevant factors affecting Chinese patent citations. In the Tobit estimation, the two-step method proposed by Heckman (1979) was applied. As for the data, we use the patent and patent citation data from the U.S Patent and Trade Office of first inventors residing in China in the period of 1977-2017. We resort to the Patents View to collect data. 5) Results Firstly, short geographical distance will increase the probability of inventor citations or, in other words, that knowledge spillovers are localized to some extent. Secondly, technical similarity has a positive impact on knowledge flows in China. Thus, the finding in this paper that technology flows are both industry-specific and confined by geography, provincial-level administrative unit borders, indicates that regional polarization in China may indeed be a reality. KNOWLEDGE FLOWS IN CHINA: A PATENT CITATIONS ANALYSIS