Innovation-driven growth: the power of technological capability in regional development

Abstract

As regional development becomes increasingly technically complex, technological capability has a growing influence on economic growth. Traditional theories predominantly concentrate on macro-level concepts, often overlooking the relationship between technological capability and regional economic growth, which has seldom been empirically examined. From the perspective of ‘technology space’, we select data on Chinese invention patents to construct indicators and explore its impact on economic growth. Our empirical results reveal that technological capability is a significant driver of regional economic growth. Our findings reveal four notable results. (1) Technological capability positively promotes regional growth but exhibits certain non-linear characteristics wherein as technological capability improves, its marginal effect on economic growth diminishes. (2) Technological capability primarily fosters regional economic growth through technological upgrading, industrial diversification and knowledge spillover mechanisms. (3) The policy environment and market conditions moderate the promotional effect of local technological capability on regional economic growth. (4) The economic growth effect of technological capability is time-dynamic and exhibits regional heterogeneity. The conclusions of this study deepen the understanding of regional development theory in terms of technology path dependence and breakthrough mechanisms, revealing technological capability as a core driving force behind regional economic evolution and redefining the logic of regional economic growth. These insights offer actionable guidelines for policymakers to tailor strategies according to local technological endowment stages.