How Does China Reshape the Global Technological Landscape?—An Analysis from the Identification, Spillover, and Institutional Drivers of Total Factor Productivity Leap

Understanding how late-developing economies can transform from technology recipients into sources of technology spillovers remains an important yet underexplored question. Drawing on annual total factor productivity (TFP) data for China and 17 other G20 economies from 1978 to 2023, this paper applies time-varying econometric methods to trace the evolution of cross-country technology spillovers and to identify the institutional factors underlying China’s transformation. The results indicate that China has become a net source of TFP spillovers within the G20, with the reach of its spillovers expanding gradually from developing resource-based economies to advanced European and North American economies. This transformation was driven by two major nonlinear TFP leaps, both of which coincided with landmark institutional reforms. Furthermore, China’s outward spillovers to other G20 members have strengthened significantly since the mid-1990s, whereas the technological influence of developed economies on China has weakened over the same period. By documenting how a late-developing economy’s spillover role evolves across countries at different development stages, this study provides new evidence on the changing position of emerging economies in the global technology landscape and offers policy implications for late-developing economies seeking sustained productivity growth.