Does Local Governments’ Innovation Competition Drive High-Quality Manufacturing Development? Empirical Evidence from China

Xiaojie Yuan () and Huiling Wang
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Xiaojie Yuan: School of Economics, Lanzhou University, Lanzhou 730000, China
Huiling Wang: School of Economics, Lanzhou University, Lanzhou 730000, China

Sustainability, 2025, vol. 17, issue 14, 1-19

Abstract: This study aims to reveal the influence mechanism of innovation competition on the high-quality development of the manufacturing industry in Chinese local governments. Additionally, the study provides a theoretical basis for understanding how governments’ investment in science and technology breaks through key technological bottlenecks, enhances the innovation ability of enterprises, and promotes the high-quality development of the manufacturing industry. Based on balanced panel data of 269 prefecture-level and above cities in China from 2008 to 2021, the entropy value method is used to construct a comprehensive evaluation index of manufacturing development quality, and a two-way fixed-effect panel model is employed for the empirical analysis. The findings reveal that (1) for every 1% increase in local government investment in science and technology, the manufacturing high-quality development index will increase by 0.261%, indicating that local governments’ innovation competition significantly promotes the quality of manufacturing development; (2) enterprise innovation capacity plays a mediating role between government competition and manufacturing quality improvement; (3) the combined mechanism of innovation drive and promotion tournament results in a significant spatial strategic interaction of local governments’ innovation competition and a positive spillover effect on neighboring regions. Therefore, this study suggests that local governments implement different science and technology innovation investment strategies to optimize the allocation of innovation resources according to the regional manufacturing technology level.

Keywords: local government innovation competition; technological innovation; regional innovation capability; manufacturing quality development (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2025
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