“County-to-City Upgrading” Policy and Firm Innovation—Evidence from China

Yida Song ()
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Yida Song: China Institute of WTO Studies, Academy of China Open Economy Studies, University of International Business and Economics, Beijing 100029, China

Sustainability, 2024, vol. 16, issue 12, 1-19

Abstract: The “County-to-City Upgrading” policy represents a typical tool for central and local governments to promote the urbanization process through administrative empowerment. Do local governments’ policies promote innovation-driven high-quality and sustainable development? Under the context of the high-quality development of China’s economy, this paper examines the quantitative impact of the local governments’ “County-to-City Upgrading” policy on enterprises’ innovation. Using a staggered-DID model and the data from the Chinese Patent Database and the Industrial Enterprise Database from 2000 to 2013, the baseline results indicate that the policy not only increases the quantity of innovation but also improves the quality of innovation. The key findings of the research are the following: (1) The policy primarily promotes innovation activities among local enterprises through the cost reduction effect and resource accumulation effect. (2) The policy has a more significant impact on boosting innovation in the eastern regions as well as areas with stronger intellectual property protection. (3) The policy not only can advance technological and practical innovation but can also help enterprises overcome the problem of technological containment. (4) The policy has a prominent impact on green and low-carbon patents, which implies that it has become a significant drive pushing forward local green and sustainable development.

Keywords: “County-to-City Upgrading”; administrative decentralization; Firm Innovation; technological containment (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2024
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