Vertical Fiscal Imbalance and Transformation of Industrial Innovation Achievements: Based on Panel Data of 30 Provinces in China

Abstract

Based on the background of deepening the financial system reform and innovation-driven development strategy, this paper incorporates the vertical imbalance of finance and the transformation of industrial innovation achievements into the theoretical analysis framework, and explains the mechanism of the vertical imbalance of finance on the transformation of industrial innovation achievements through theoretical analysis. Based on the panel data of 30 provincial regions in China from 2003 to 2020, it is found that the current vertical fiscal imbalance in China has a significant negative impact on the transformation of industrial innovation achievements. Furthermore, there are regional and time heterogeneity, which is manifested in the fact that the transformation of industrial innovation achievements in the eastern region is not easily affected by the vertical fiscal imbalance, while the central and western regions are easily affected by the vertical fiscal imbalance. Meanwhile, the negative impact of fiscal vertical imbalance on the transformation of industrial innovation achievements after 2012 is significantly stronger than that before 2012. In addition, the scale of science and technology education expenditure has a mitigating effect on the negative effects of fiscal vertical imbalance and the transformation of industrial innovation achievements. In order to promote the implementation of innovation-driven development strategy, China should further deepen the reform of financial system, improve the performance appraisal system of local governments, and accelerate the optimization and upgrading of industrial structure.