An analytical framework of technological learning/upgrading explains the ability of individual enterprises to adopt minor process changes and major technological changes to reap “environmental technique effects”—improved productivity from more environmentally friendly techniques. Within the industries studied, building enterprise technological capabilities tended to focus on importing and adapting existing but new-to-China technologies and business processes, rather than engaging in new process or product innovation. China’s path to technological upgrading relied on fundamental reform of its public sector research and development institutes and promotion of national champions in a wide range of industries as part of a larger effort to enhance industrial productivity. Increasing openness to international trade and investment also has been part of the story, but here it is not clear how much the technologically more capable enterprises also tended to be exporters, or if new export opportunities spurred enterprises to invest in improved technical capacities.
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