Government R&D Investment, Knowledge Accumulation, and Regional Innovation Capability: Evidence of a Threshold Effect Model from China

Abstract

Innovation is the primary driving force of development and the strategic support for building a modern economic system. For enterprises, continuous innovation capabilities can effectively deal with uncertainties in the business environment and can enhance business competitiveness. Macropolicies can stimulate economic development and can try to promote enterprise innovation, but there is still widespread debate in academia about whether these policies successfully promote or, in fact, inhibit innovation. Looking at the provincial panel data from China between 2009 and 2018, the authors of this paper explored the complex nonlinear mechanism of government R&D investment in driving regional innovation capabilities from the perspective of knowledge accumulation. The empirical results show that, when the level of knowledge accumulation is used as the threshold variable, there is an obvious threshold effect between government R&D input and regional innovation capabilities. As the level of knowledge accumulation crosses the threshold, the influence of government R&D investment on regional innovation capabilities undergoes a structural mutation, shifting from an insignificant inhibitory effect to a significant promotional effect. The above conclusion has strong robustness. This article provides useful policy enlightenment for China to promote the development of scientific and technological civilization and the construction of an innovative country.