Seminar with Fushu Luan: Institutions and Innovation: Evidence from Chinese Cities (joint with Yang Chen and Paulo José Regis (both Xi’an Jiaotong-Liverpool University)
We contribute to explore the roles of sub-national leaders and institutional environment in shaping urban innovation in China. We adopt a dynamic production function framework using a panel dataset comprising 280 prefecture cities during 2001-2014. We find that knowledge and education boost local innovative outputs and has positive spillover effects; the externalities of domestic and foreign capital are limited to local investments.
Controlling for the basic production inputs, our analysis unveils a clear and significant role of meritocracy with regional dimension in sharpening the competitive advantage of city innovativeness measured by patents applications. Party secretary competition intensity and tenure encourages innovation while city mayor turnover rate has a negative effect. Marketization intensity also positively links with urban innovation. Compared with diversity and specialization, competitive industrial structures bring more creative elements into regional knowledge and idea production.