Evaluating the dynamics of digital technology in enhancing overall effectiveness of China's national innovation systems: A study based on VHSD and EM approach

Abstract

Abstract Along with the gradual entry of the world into the digital era, digital technologies have flourished and have been silently integrated into the innovation processes of technology research and development, transformation, application, and diffusion. In the countries' efforts to establish and strengthen national innovation systems (NIS), the development of digital technologies has received increasing attention. It has become a key driving force for the optimal growth and effective operation of national innovation systems. This study quantitatively assesses the overall effectiveness of China's national innovation system (NIS) using data from 30 provinces in China from 2012 to 2022, employing the Vertical and Horizontal Scatter Degree Method (VHSD), Entropy Method (EM), and coupled coordination models, and examines the external impact, internal mechanism and spatial heterogeneity of the development of digital technologies on the overall effectiveness of national innovation systems in the light of the characteristics of the digital era. The study results show spatial aggregation in the overall effectiveness of national innovation systems, with regions with high overall effectiveness clustering and areas with low overall effectiveness clustering. Second, the development of digital technology improves the overall effectiveness of national innovation systems, which is confirmed by endogeneity treatment and various robustness tests. Third, digital technology improves the overall effectiveness of national innovation systems by promoting the development of a service-oriented industrial structure and active labor market. Fourth, the impact of digital technologies on the overall effectiveness of national innovation systems is spatially heterogeneous. It is less pronounced in the Northeast and East but very significant in the Central and West, and the main reasons for this counterfactual result can perhaps be explained in terms of both diminishing marginal effects and policy tilting effects. Finally, this study not only gives corresponding policy recommendations but also further discusses the dilemmas and challenges that may be encountered in implementing these policies.