How does the spatial agglomeration of human capital affect strategic innovation in China?

Abstract

This study investigates whether and how the spatial agglomeration of human capital affects strategic innovation, as measured by invention patents in strategic emerging industries in China. We also evaluate the aggregate effects of human capital allocation between 2000 and 2020 on strategic innovation based on the estimates. The results show that increases in human capital density significantly promote strategic innovation. On average, a 1 % increase in the densities of knowledge and technology talents contributes to an increase in strategic innovation by 0.19 % and 0.11 %, respectively. We further reveal that the agglomeration effects largely originate from the improvements in labor market matching and knowledge spillovers. Counterfactual analysis indicates that the spatial agglomeration of human capital would increase the overall strategic innovation by at least 1.36 % over the 2000–2020 period.