The impact of innovation on intra-city economic disparity: a technological complexity perspective

Enni Xu and Fei Fan

Applied Economics, 2025, vol. 57, issue 52, 8769-8784

Abstract: As innovation progresses, the overall complexity of technological inventions also grows, impacting the spatial effects of innovation. This study, utilizing data from 281 Chinese cities from 2005 to 2020 and employing panel threshold regression, re-evaluates the impact of innovation on regional disparities from the perspective of technological complexity. Initially, the paper introduces a nonlinear iteration method to generate two metrics: innovation complexity for assessing regional innovation and technological complexity for assessing patent quality. Subsequently, the study incorporates technological complexity into the theoretical framework of spillover and siphoning effects, exploring its impact on intra-city economic disparity. The results reveal: (1) Overall, innovation in Chinese cities contributes to alleviating intra-city economic disparity. However, this effect is nonlinear, gradually diminishing as innovation increases. (2) The study empirically supports the statement innovation in high-complexity technologies plays a smaller role in reducing regional disparities than innovation in low-complexity technologies. (3) We also examine how geographic factors moderate the effects of innovation of varying complexities on economic disparity, finding that increasing geographic barriers can result in opposite moderating effects on high-complexity and low-complexity innovation. Our research implies that the ongoing evolution of innovation towards domains with higher technological complexity potentially threatens balanced regional development.

Date: 2025
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DOI: 10.1080/00036846.2024.2403781

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