THE COORDINATIVE DEVELOPMENT BETWEEN R&D
AND TECH-ACQUISITION IN CHINA
Xu Qingrui Jin Keyie
Industrial Engineering/Management Science Dept.
Zhejiang University
Hangzhou P.R.China
Abstract
This paper studies the coordinative development of R&D and tech-
acquisition in the industrialization process of China,dealing with the
mechanism of interaction between R&D and tech-acquisition.It also
deals the mechanism of limited resources allocation in capital
investment to R&D and tech~acquisition areas.A system dynamics model
about coordinative development of R&D and _ tech-acquisition is
developed.
1. Basie Structure of the System
As the development of science and technolog, we have more and
more clearly recognized the close relationship between
S&T iscience and technology) and the economy. On one hand, demands
are required continually from the economy for saT; In
addition, financial support is given to S&T by the economy. On the
other hand, enormous potential promotion is delivered to the
grovth of the economy from S&T. In short, they have mutual reliance
and promotion. But as for S&T itself, there are unilateral
recognitions in some people's minds; Furthermore, because of this
kind of unilateral recognition, the promotion of S&T on the
economy is limited, and the resources are being wasted at the same
time. In fact, the development of S&T in any country, especially in
developing countries, should be promoted through two ways
tech-acaquisition. Both of them have significant effects on the
development of S&T for the nation. But it should be emphasized
that the effects are not unilateral. That is to say ,neither
national R&D nor tech-acquisition can play the complete role of
S&T in the promotion of economic growth. The level of S&T in the
nation can be raised as quickly as possible only through the
coordinative development of national R&D and tech-acquisition.
Therefore,the basic structure of the system that this paper deals with
is described in Fig 1.
There are ai lot of
factors which have,
directly or indirectly
»notable impacts on the
growth of the economy
-But the impacts caused
by different factors may
differ .Furthermore, the
relative power of the
Fig 1 Basic Structure impacts caused by
National R&D
iTech-Acquisi tion!
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different factors may change if the situations are considered from
different points of view,so the interaction between education and
economy, education and S&T are simplified in the system,and the
boundary of the system is limited only to the areas of economy and
S&T.It should be mentioned that the simplification doesn't mean that
education is unimportant,but to concentrate on the foundamental points
of the system.Similarly,although national R&D and tech-acquisition are
related to many factors,it is impossible and unnecessory to discuss
all the influencial factors due to the limitation of this model. -
To be prudent,some hypotheses that run through the paper are related
as follows: 1)There are two meanings bestowed on R&D in the paper.the
first is the self-development of R&D.The second is the absorption and
innovation of the acquired technology.Both are supposed to promote the
development of S&T and the growth of the economy.2)I[t is well known
that the output of scientific research not only depends on capital
investment,but also depends on the match degree of, the all imput
factors.This Paper probes into the coordinative development of
national R&D and tech-acquisition relating to the whole process of
economic growth.The effects of the labor force on the output of
scientific research is simplified.
The definition and classification of R&D and tech-acquisition can be
found in the reference.
2.The Subsystem of S&T
In accordance With the characteristics of research,national R&D can
be classified into two groups.One is the self-development of
R&aD.Another is absorption and innovation of acquired technology.
However, these two aspects are not separate.They are mutually promoted
as the S&T level is improved.On one hand,output products of the
investment of the self-development R&D signifies that the level of
national scientific research has been increased.Meanwhile, the
increasing level of scientific research improves the ability of
absorption and innovation of acquired technology.As a _ result,the
output of absorption and innovation of acquired technology is
increased.On the other hand,the gained output products of absorption.
and innovation of acquired technology raises the S&T level.As a
result,more self-development R&D output will be obtained at the same
scale as the self-development R&D investment by shortening the
research cycle and the improving research efficiency.
In accordance with the definition and the classification that we
mentioned before.The structure of the S&T subsystem can be described
as in Fig 2.
As to the self-development of R&D ,when investments in each kind of
research are given, output quantity of the corresponding research is
decided by the research cycle and research efficiency.Here, the
research efficiency refers to the output quantity under a certain
investment while other influencial factors are relatively fixed.In
general,research efficiency depends on the following factors.The first
is the prerequisite possession of relative imformation for the
research.E.g.one of the main factors that affects the AR and ED
efficiency is the sufficient degree of the preceeding research
products .The second is abundant research experience.In general, the
accumulation of the research experience varies directly with the
advancing of the research work.The research cycle refers to average
time within which a research project can be finished.Research cycles
of the three kinds of research mentioned before vary with the
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Investment Investment
Economy }
Contribution T T Contribution
1
Acquisition of
operating Tech.
Experiment fndustrilized Tech,
Development
(C—_____________.ixcquisition of Designing
"and Manufacturing Tech.
Application
Research ; Acquisition of
Co _____________-}Laboratory Products
r
Basic Acquisition of
Research Foreign BR Products
= 1
Fig 2. The Subsystem of S&T
characteristics of each kind of research.The length of the cycies
still can be changed by other factors.E.g.as to AR and ED research
eycle,they are related to the sufficient degree of the research
resources.The more products accumulation of the preceeding research,
the less roundabout courses,and the quicker the research output rate.
‘Unlike AR and ED,the BR cycle is shortened with the increase orf the BR
level.The cause-effect relationship of AR input-output is described in
Fig 3.
AR + Practical Demand Practical Abundant
rae ———* or BR aes Degree of BR Products
+ 2 +
AR Outputs AR Cycle \
Rate BR Products
le i ee +4 Supply
AR AR Efficiency
Products
+
hcolfatetion go ~\Paetaiive = AR Products
AR Products AR Level —~————_ In Foreign Countries
Fig 3 The Cause-Hffect Relationship of AR Input-Output
In general,obtained research products can not be applied in the next
link of the chain of self-development R&D immediatly.This is because
scientific research activities,which are supposed to sovel the
problems that are not solved or even touched previously, are
exploratory. So to understand and apply the research products needs
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some prerequisite knowledge and neccessary preparation.Therefore,it
will last a Period of time from output of products to
application, i.e.the absorption delay of the products.Furthermore, the
expansion of demand and the increase in the research level will be in
favor of shortening the delay.
In terms of tech-acquisition, except the acquisition of operating
tech.,designing and manufacturing tech.,and laboratory products,it
will include the acquisition of foreign BR products.This enables us to
study the problems objectively and all-sidedly.The acquisition of
operating tech. mainly concentrates on expanding production.It affects
the economic system directly.
Usually,the acquisition cost of foreign BR products is relatively
low.So the provided foreign BR products which is suitable and helpful
to the national scientific research will be acquired in most cases.In
brife,the acquisition number of foreign BR products mainly depands on
the amount of foreign BR products that can be acquired,and the
absorption ability. The cause-effect relationship of foreign BR
Products acquisition and absorption is described in Fig 4.
™ pr ———TER Absorption MS ———T ER Absorption 4 Relative = 5 __ Foreign BR
Products OB abil Uy BR Level output
avaowttion Rate — Possible Hoqalaftien
of BR Products Number of
BR _
BR Products Absorption
wee Delay
weqalusibiion Rate, aa Possible
BR atu of Foreign cgi te Acquisition Number
Supply BR Products of Foreign BR Products
Fig 4 The Cause-Effect Relationship of Foreign
BR Products Acquisition and Absorption
The acquisition cost of designing & manufacturing technology and
loboratory products is relatively high.So the acquisition of designing
& manufacturing technology and laboratory products is not only
confined by the number that can be acquired, but also decided,to a
marked degree,by the defrayable foreign exchange.Especially in
China, the desirable investment of tech-acquisition are always far more
than the defrayable foreign exchange supply.So in theory the
acquisition of designing & manufacturing technology and laboratory
products is not decided by demand,but by supply.
In terms of the acquired technology ,to be used effectively,it needs
a process called the absorption cycle of the acquired technology .The
absorption cycle depands on the research cycle of the relative kinds
of self-development research .In addition,it is closely related to the
absorption ability and absorption investment.The cause-effect
relationship of designing & manufacturing technology acquisition
and absorption is described in Fig 5
871
Investment of Abundant Degree
Acquisition ~~~", of Absorption
ginvestment
National
Research Level
Average Cost
+ Number of
of Acquired Tech.
~ Acquired tech.
+
Investment of . Absorption
Absorption Absorption
Ability
Cycle eAbsorbed py -~
+ Te Tech.
Relative Kind of
Relative Kind of
Self-Development “Ns R&D Products
Research Cycle Accumulation
Fig 5 The Cause-Effect Relationship of Designing &
Manufacturing Tech. Acquisition and Absorption
3.The subsystem of the economy
The key point of this paper is the coordinative development between
R&D and tech-acquisition,which focuses on promoting economic growth
and the development of science and technology.So some internal
structure of economic subsystem is simpiified. The macroeconomic level
of the country is reflected mainly by the GNP and the import & export
trade value.The cause-effect relactionship of the economic subsystym
is described in Fig 6.
ae S&T and Economy _______——s¢_ Increasing Rate
Development Level of R&D Investment
Increasing + -
Bs
Rate of GNP x Increasing Rate
~ of Import
Foreign Tech-Acquisition RaD
+Trade Value Value * Investment
s + t National
Export. Foreign Trade Research Level
Value ici +
x bsorption & Innovation
+ Import’ Investment f
Stimulating Factor Value?
Self-Development
of Exportation R&D Investment
Fig 6 The Cause-Effect Relationship of the Economy Subsystem
According to international business theory,both import and export
value have some relationship with the nation's GNP.For a particular
country ,the proportion of export value comprising the GNP is
relatively steady over a certain period of time.Of course,in the long-
run,the proportion will be changed by some other factors such as_ the
development of S&T etc.Similarly,there is also a relationship between
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import value and tech-acquisition value .As the nation'research level
improves and the difference between China and the developed countries
lessens,the proportion of tech-acquisition value comprimising total
import value increases and then declines. According to international
convention,the limitation of a nation’s foreign exchange accumulation
is 3 month's import value.So in the model, the sum of foreign exchange
deficit adding 3 month's import value is used as a feedback control
variable.If the result is below zero,some special policies will be
adopted to limit import and to stimulate export.This feedback control
in the model is realized by means of a SWITCH function.
4.Some Results and Conclusions
In order to study the coordinative development between R&D and tech-
acquisition, three kinds of investment policy variables have been set
in the model.The first is the investment structure variable of tech-
acquisition.The second is the investment structure variable of self-
development R&D.The third is the allocation variable between
absorption & innovation of acquired technoiogy and se! f-development
R&D.The policies are given according to the theoretical reliability
and practical possibility.
After the DYNAMO program has been adjusted repeatedly,the policy
variable are fixed at a certain level,Then we obtain basic simulation
results.
* GNP tends towards an exponential changing pattern. Its increasing
rate follows a high-rate development period,a non-steady development
period,and then tends towards a low-rate steady period.The st
increasing rate is about 3.2 percent.By the year 2900,the GNP in C
will reach the level of $919 billion, i.e.¥3427.8 billion (converted
according to the 1987 exchange rate)
* Import and export values tend towards an exponential changing
pattern.Similar to the increasing rate of the GNP, the increasing rate
of import value takes the three steps,and tends to be steady at
last.The increasing rate of the export value is relatively
steady.Meanwhile,the proportion of the total value of import and
export trade comprising the GNP in 1987 was 17 percent.From now
on,through 30 years of continual increase,the proportion wil
stabalize at 26 percent.
* Total R&D investment tends towards an exponential pattern.[ts
increasing rate will remain high in 20-30 years,and then will
stabaljze at § percent.In 1984,the proportion of the total R&D
investment comprising the GNP was less than 1 percent.In 45 years, the
Proportion will reach the level of 3.3 percent.The increasing rate of
tech-acquisition value will remain high in 15-25 years.Its average is
about 8.7 percent.Correspondently, the average proportion of investment
used for absorption and innovation of acquired technology comprising
the total R&D investment is 12 percent.
Three kinds of policy variable consist of a number of investment
policies.By means of analysig the effects of these policies on severa
major economic and scientific indeces,some conclusions can be drawn as
follows:
1) Tech-acquisition will play an important role in the growth of the
economy and the development of S&T in China,especially from now to the
year 2010.At present,the proportiom of different kinds of tech-
acquisition is described as follows: Operating Tech.:Designing &
Manufacturing Tech.:Laboratory Products=0.7:0.28:0.02.By the year of
1995,the proportion will be 0.2:0.75:0.05.By the year of 2005 ,the
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proportion will be 0,.03:0.57:0.4.As the nation's research leve
improves, the direct effects of tech-acauisition on the economy will be
weakened
2) National R&D will play a decisive role in increasing the nation's
research level.The distribution of self-development research
investment should take the policy that if resources(funds) are
abundant then BR will be a priority,otherwise DR will be a
priority.From now to the year 2000,national R&D should pay great
attention to the absorption and innovation of acquired technology.In
particular,investment in this domain should be raised greatly.From the
results of the 1985 Chinese national scientific survey, the investment
of absorption and innovation of acquired technology only comprised
less than 3 percent of the total tech-acquisition value--$4.25
billion.This situation has become the second unfavourable factors
follows the factor of technical suitability to the absorption and
innovation of acquired technology.
3) In short,the successful way of improving the growth of the
economy and the development of S&T in China must be as follows: From
now to the year of 2000,on the basis of ensuring the R&D
investment, tech-acquisition must be emphasized.This is a shortcut to
catch up with the developed contries in a relative short period of
time.But it doesn’t mean that China needn't develop its own research
system.Quite the opposite, from now on, China must pay great attention
to basic research(BR) in order to lay a good foundation for the
continuous development of S&T and the growth of the economy.
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