China’s Agricultural Productivity: Foreign and Indigenous Innovation Compared

China’s Agricultural Productivity: Foreign and Indigenous Innovation Compared

This study investigates the dynamic interplay between agricultural productivity and technological progress in China, explicitly distinguishing between indigenous innovation and foreign technology transfer—a gap largely unaddressed in prior research. Employing a Structural Vector Autoregressive (SVAR) model, the analysis integrates time-series data beginning in the year 1995, when patent registration by Chinese residents began. It focuses on the three core variables of agricultural productivity, domestic technological innovation, and foreign technology inflows. The findings reveal a causal and statistically significant link between agricultural productivity and indigenous technological progress. While foreign technology contributes to the innovation process, its impact appears to be comparatively limited and often mediated through compulsory transfer mechanisms rather than voluntary diffusion. The evidence suggests that China’s initial productivity gains were largely fueled by economic liberalization, which subsequently laid the foundation for local sustained innovation. These results have notable policy implications for emerging economies and underscore the importance of first investing in economic reforms to foster an agricultural transformation that is both enduring and information-driven.