The Effect Of Technical Innovation On Economic Transition

In the time of knowledge-based economy, technical innovation is becoming more and more prominent in the socio-economic development. Governments in many countries have introduced policies to promote technical innovation and socio-economic development. A number of emerging regional development theories count innovation as the primary factors which determine and affect the competitiveness of regional development. In the past30years, China has achieveed tremendous success in economic growth, but its industrialization route was characterized by high-input, high-cost and low-efficiency. Therefore, there is a urgent need to promote China's economic transformation by technical innovation. Nowadays, most researches tend to conceived that the technical innovation influences economic restructuring on a "point" and ignore the regional differences. But in fact, technical innovation cannot affect economic trasformation without space carrier. If we ignore the spatial characteristics of the regions we can hardly accurately grasp the inherent relationship between technical innovation and economic trasformation. In addition, existing research mostly remain at the level of theoretical analysis, overemphasizing the influences of innovation on economic transformation but inadequately caring about the restraining factors that technical innovation exerts on economic transformation. However, as a matter of fact, the influences of technical innovation on economic transformation vary in different regions and industries. If we overemphasize the effect of technical innovation, it may lead to unsatisfactory results in economic transformation. So this essay tries to examine the relationship between technical innovation and economic transformation in a spatial perspective, solve the above problems and provide some useful lessons for China's economic transformation.This research, based on detail statistical data, combining theoretical analysis with empirical test, studies the relationship between China's technical innovation and economic transformation in two-dimensional angle (space-time) and four spatial scales (country, province, city and sector). The core issue of this study is twofold:first, whether technical innovation promotes China's economic transformation? Second, what are the restraining factors that technical innovation exerts on economic transformation?This research, following the line of new economic geography, drawing on theories of globalization, localization, institutional economics, comes up with the analytical frame as follows:technical innovation is a basic condition and source for accomplishing economic transformation. The extent to which technical innovation influeces the economic transformation is restrained by globalization, marketization, localization and space interaction, which determine how far innovation can be applied to economic transformation. On this basis, this research finds that technical innovation is applied to economic transformation in the following manners:(1) improving the quality and performance of products;(2) reducing the input;(3) optimizing combination of elements;(4) inventing new tools;(5) improving the skill and quality of labor;(6) widening the scope of utilizing resource. Then, the study analyzes how globalization, marketization, localization and space interaction embed in technical innovation and influence the mechanism of economic restructuring.On the basis of the theoretical analysis of influence technical innovation on economic, transformation this research intuitively analyses whether there are time-space couplings at country level, provincial level, city level and sector level. The findings are:(1) at the country and sector level, technical innovation and economic transformation are highly coupling. Compare the selected12sample sectors, the technical innovation of textile, papermaking&paper products, oil processing, coking&nuclear fuel processing, rubber&plastic products, electrical machine&equipment manufacturing are relatively highly coupling with economic transformation.(2) At provincial level, the technical innovation of every province is highly coupling in the year1997,2000,2005and2009, of which the year2005is the highest and2009is the lowest. High-high coupling provinces are few, and most provinces are low-low coupling. High-high coupling provinces mostly located in Yangtse River Delta, Pearl River Delta and in areas surrounding Bo Sea.(3) At city level, Guangdong province of East China has more coupling cities, while Henan province of Central China has less coupling cities. In2005, Shannxi province of West China only had2cities (out of10cities) of which technical innovation weren't coupling with economic transformation, and this number increased to6in2009. Most cities of the3provinces chosen in this study are low-low coupling. In terms of the change of type, the number of high-high coupling type in Guangdong province is increasing during the year2005-2009. The economic transformation of some cities in Henan province and Shannxi province remain poor, although their technical innovation standards are high, such as Zhengzhou, Luoyang and Xi'an. The quantile of economic transformation is improving in some cities of Henan province of Central China and Shannxi province of West China; however, their level of technical innovation is still low.This research further verifies the relationship between technical innovation and economic transformation by econometric models. The findings are:(1) regression analysis shows that technical innovation positively promotes economic transformation at country level and sector level. By Unit Root Test, the Cointegration Test and Granger Causality Estimation, it shows that technical innovation has significant effects on economic transformation at the country level and the effect grows more noticable as time goes on. And economic transformation has promoted technical innovation to some degree, but the role of economic transformation is gradually weakening. The interaction between them is positive. At sector level, according to the interactive relationship between technical innovation and economic transformation, the study classifies the chosen12sectors into4categories:the first is Interactive Type, represented by Food, beverage&tobacco industries and Leather, fur&feather products, among which economic transformation of Food, beverage&tobacco industries interacts with technical innovation most significantly. The second is the Type of technical innovation influencing economic transformation, represented by Oil processing, coking&nuclear fuel processing, and Metal products manufacturing. The third is the Type of economic transformation influencing technical innovation, represented by Rubber&plastic products, Electrical machine&equipment manufacturing. The forth is Non-influence Type, represented by Chemical fibers manufacturing, Nonmetal mineral products, Chemical raw materials&products manufacturing, Textile, Papermaking&paper products, Medical manufacturing industries.(2) On the basis of VAR model, by building up impulse response function, the results are:at country level, technical innovation plays more significant role in economic transformation than economic transformation plays on itself. Technical innovation has greater impacts on itself than economic transformation does. At sector level, according to the impacts of economic transformation on itself and the influence that technical innovation on economic transformation, the economic transformation type of these6sectors, which have cointegrating causal relationship can be classified into into3categories:Innovation-driven Sector: Food, beverage&tobacco industries. Non Innovation-driven Sector:Rubber&plastic products, Electrical machine&equipment manufacturing. Mixed Type Sector:Leather, fur&feather products, Oil processing, coking&nuclear fuel processing, and Metal products manufacturing.(3) By using Geographical Weighted Regression Model, it is found that most of the fitting degrees in GWR Model are higher than that in OLS Model. The spatial differences with respect with influence of technical innovation on economic transformation show a gradient tendency from West to East:the provinces in the first echelon (1.08-2.07) are Xinjiang, Gansu, Ningxia and Heilongjiang; the second echelon (0.91-0.99) including Shannxi, Qinghai, Sichuan, Yunnan, Guizhou, Shanxi Chongqing and Guangxi; the third echelon (0.73-0.88) including Hainan, Jilin, Hunan, Guangdong, Beijing, Hubei, Hebei, Henan, Tianjin and Jiangxi; the forth echelon (0.57-0.70) including Liaoning, Fujian, Anhui, Shandong, Zhejiang, Jiangsu and Shanghai. This results may possibly result from:the path dependence on the former economic development; the effects technical innovation exerts on economic transformation may be affected by other factors; innovative achievements don't apply to its origin or lay idle; development of East China starts earlier and the economic restructruing is more difficulult to achive, thus innovation breakthrough is needed.At the end, the research analyzes the restraining factors that technical innovation exerts on economic transformation and finds that at provincial level, there exists significant interaction in the process of economic transformation among provices. Regional decentralization endows local governments with more power, which inspires their rational emulation and local protection after the Reform and Opening-up policy was carried out. Not only does technical innovation has positive effects on economic transition, globalization, marketization, human capital, rates of access to information technology and economic development also play important roles in economic transformation. Among all the factors that affect economic transformation, the effects of human capital and international trade outweighs that of technical innovation. According to the theoretical analysis, government plays important roles on economic, transformation but empirical research suggests that because of poor enforcement of some policies and dependencies on the former mode of production, its roles have yet to be improved. Economic development and application of information technology just create conditions for economic transformation but have little impacts on it. Marketization has played a positive but not significant role on economic transformation.