Understanding the Catch-Up Innovation in China: A Perspective of Local Government Competition

Abstract

This paper delves into the phenomenon of catch-up innovation in China, examining it through the institutional framework of local government innovation competition. Our theoretical modeling indicates that in order to perform well in performance appraisals and obtain a greater probability of promotion, local governments tend to implement excessive policy incentives, ultimately sparking an intense competition for innovation among regions in China. Empirical analyses corroborate the effectiveness of supportive policies in fostering local innovation. Nonetheless, excessive policy intervention has exhibited a propensity to stifle local innovation performance. In the spatial dimension, regional innovation competition demonstrates notable positive spatial effects, while the potential negative spatial effects of excessive competition have yet to emerge. By scrutinizing the influence of regional innovation competition on patent knowledge width and patent types, we conclude that regional innovation competition is unlikely to alleviate the issue of low-quality innovation in China. Consequently, this paper advocates for the urgent enhancement of the official evaluation system by incorporating indicators pertaining to innovation quality, thereby amplifying the positive impact of regional innovation competition on patent quality. Simultaneously, the official evaluation system should remain vigilant against the detrimental effects of excessive competition and facilitate the transition from regional innovation competition to regional innovation cooperation through the optimization of local government behavior.