Knowledge Flows Within Chinese Administrative Provinces: The Role of Regional Research Structures

This paper explores the determinants of knowledge flows, proxied by patent citations, within 31 Chinese administrative provinces. Relying on patent data from the US Patent and Trademark Office during the period 1995-2019, we are able to identify 27118 patent citation pairs (focusing only on USPTO patents with first inventors residing in China). In order to explain the number of citations from a Province to another, in addition to geographic and technological proximity, we use factor analysis in order to capture the effect of regional research structure. In particular, we measure the private versus public research intensity of each Chinese administrative province. Our econometric results show that, as expected, geographical and technological distance between Provinces are negatively correlated with patent citations. In addition, we find that Chinese administrative provinces that show bigger intensity with regard to public and to private research both receive more patent citations and cite more other patents in other Provinces. This effect is particularly significant when the two regions are specialized in private research, which indicates a strong effect of cognitive proximity. Finally, and at odds with prior research, we find that controlling for social proximity between Provinces does not impact the effect of geographical and technological proximity. These results, if confirmed by further studies, might have significant policy implications.