Global value chains, technology sovereignty and the role of China in international knowledge diffusion

The rise of China as an economic power and supply shortages during the COVID-19 pandemic have led to a reassessment of dependence on foreign sources of technology. This study contributes to this discussion by analysing technology dependence in a global value-chain framework. We employ input-output and business R&D expenditure data from 38 countries to assess how the dependence on R&D embodied in imported inputs changed over the course of a decade (2010–2019). The analysis reveals heterogeneous results across countries. While overall dependence on foreign technology remained stable in the EU-27 and the US, the share of imported R&D from China in total final production almost doubled in most countries. In 2019, China accounts for about one quarter of the total R&D embodied in imported intermediate goods in the EU-27 and the US. In turn, China was able to reduce its technological dependence over the decade in question thanks to a rapid growth of domestic R&D expenditure. Regional integration in terms of technology flows between Asian countries was much higher in 2019 than it was 10 years earlier.