Public Procurement of Innovation and Regional Technological Diversification. The Role of Local and Non-local Sourcing in China

Yuqi Ma, Zhaoyingzi Dong, Pierre-Alexandre Balland and Hantian Sheng

No 2609, Papers in Evolutionary Economic Geography (PEEG) from Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography

Abstract: Public procurement of innovation (PPI) is widely regarded as a powerful demand-side policy instrument to stimulate innovation, but its role in shaping regional technological diversification remains unclear. Drawing on evolutionary economic geography, this study examines how PPI affects technological diversification under different spatial sourcing strategies. Using 2.24 million procurement contracts and 2.41 million patents from China (2016-2021), we find that PPI facilitates path-breaking diversification, but mainly through non-local procurement. Compared with local procurement, non-local procurement is more conducive to path-breaking diversification in purchasing regions, while its benefits do not spill over symmetrically to supplying regions. By reconceptualizing PPI as a spatially embedded and relational mechanism, this study extends evolutionary accounts of regional diversification beyond a purely territorial lens and highlights how the spatial organization of public demand shapes uneven opportunities for regional technological development.

Keywords: Public procurement of innovation; Technological diversification; Path-breaking innovation; Non-local procurement; Evolutionary economic geography (search for similar items in EconPapers)
Date: 2026-06, Revised 2026-06
New Economics Papers: this item is included in nep-sbm and nep-uep
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