[Paper Review] Evolution of Regional Innovation with Spatial Knowledge Spillovers: Convergence or Divergence?

Jinwen Qiu, Wenjian Liu+1 more|arXiv (Cornell University)|Jan 22, 2018

Economic Growth and Productivity3 citations

TL;DR

This study investigates spatial knowledge spillovers across 31 Chinese regions using spatial econometrics and nonlinear dynamical models, finding that knowledge spillovers promote innovation, especially in developing regions, with a radiation range of ~1,000 km. Long-term convergence in regional innovation growth rates is confirmed, indicating spillovers drive balanced regional development.

ABSTRACT

This paper extends endogenous economic growth models to incorporate knowledge externality. We explores whether spatial knowledge spillovers among regions exist, whether spatial knowledge spillovers promote regional innovative activities, and whether external knowledge spillovers affect the evolution of regional innovations in the long run. We empirically verify the theoretical results through applying spatial statistics and econometric model in the analysis of panel data of 31 regions in China. An accurate estimate of the range of knowledge spillovers is achieved and the convergence of regional knowledge growth rate is found, with clear evidences that developing regions benefit more from external knowledge spillovers than developed regions.

Motivation & Objective

• To determine whether spatial knowledge spillovers exist among Chinese regions and influence regional innovation.
• To assess the extent to which external knowledge spillovers affect long-term regional innovation evolution.
• To estimate the spatial range of knowledge spillovers and evaluate their impact on regional innovation convergence.
• To examine whether developing regions benefit more from knowledge spillovers than developed regions.

Proposed method

• Empirical analysis using panel data from 31 Chinese regions (2000–2010) to test spatial dependence and spillover effects.
• Application of spatial statistics and econometric models to estimate knowledge spillover ranges and strength.
• Integration of endogenous growth theory with spatial externalities to model nonlinear dynamics of regional innovation.
• Estimation of the radiation range of knowledge spillovers using distance-weighted spatial lag models.
• Use of convergence analysis to evaluate long-run evolution of regional innovation growth rates under spillovers.
• Derivation and validation of steady-state solutions in a general innovative growth model under spatial knowledge spillovers.

Experimental results

Research questions

• RQ1 Do spatial knowledge spillovers exist among Chinese regions, and if so, what is their spatial extent?
• RQ2 Do spatial knowledge spillovers promote regional innovative activities, and how do they affect long-term innovation evolution?
• RQ3 Do developing regions benefit more from external knowledge spillovers than developed regions?
• RQ4 Do regional innovation growth rates converge in the long run under the influence of spatial knowledge spillovers?

Key findings

• Spatial knowledge spillovers exist among Chinese regions and significantly promote regional innovative activities.
• The effective radiation range of knowledge spillovers is approximately 1,000 kilometers, beyond which spillover effects diminish substantially.
• Regional innovation growth rates in China exhibit convergence over the past eleven years, indicating long-term stabilization under spillover effects.
• Developing regions benefit more from external knowledge spillovers than developed regions, suggesting a potential for regional equity in innovation development.
• The theoretical model predicts that knowledge growth rates converge to a common steady-state rate under spatial spillovers, which is empirically validated by the data.
• Knowledge spillovers act as a key driver of innovation, with stronger effects in regions that enhance their absorptive capacity through R&D investment and infrastructure development.