Urban innovative capacity and economic efficiency: Evidence from 54 cities in China

This paper empirically investigates the impact of urban innovative capacity upon urban economic efficiency. We construct urban innovative capacity by three sub-indexes of technology infrastructure, innovative output and technology transfer respectively, while measuring urban economic efficiency by a composite index of urban industrial structure optimization, urban economic structure upgrading speed, financial capacity and economic efficiency of enterprises. Using panel data of 54 cities from 2001 to 2010, the regression results suggest that: all the three factors influence economic efficiency positively; among these factors technology transfer has the strongest positive impact on economic efficiency; the effect of technology infrastructure lacks significance statistically. Our findings imply that investment in technology infrastructure is necessary but not sufficient for economic efficiency, unless coupled with a good mechanism of technology transfer.