The mediation effect of innovation in the domestic and international economic development circulation

ABSTRACT

Based on the role of innovation in domestic economic development circulation (DEDC) and the impact of international economic development circulation (IEDC) on innovation, we construct an analytical framework for the mediation effect of innovation. Drawing on China’s provincial panel data, we employ the causal steps approach to explore the impacts of IEDC on each link in the DEDC through the mediation effect of innovation. The results show that import have a direct effect on each link and export have a negative influence on distribution and consumption. Outward foreign direct investment (OFDI) has a negative impact on production and circulation through innovation. Foreign direct investment (FDI) and invisible ways have different indirect effects on each process. In addition, the influence of IEDC decreases from east to west in China, whereas import and export better promote DEDC in the central and western regions.

KEYWORDS:

• Economic development circulation
• innovation efficiency
• mediation effect
• causal steps approach

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Funding

This paper was supported by the National Natural Science Foundation of China (NSFC) Funded Projects [grant number 42071154 and 41901189]; Natural Science Foundation of Jiangsu Province [BK20190797]; Postdoctoral foundation of Northeastern University [grant number 20210201]; Project of the Fundamental Research Funds for the Central Universities [grant number N2206011]. Youth project of high-end science and technology innovation think tank of China Association for Science and Technology [2021ZZZLFZB1207138].

Notes on contributors

Song Wang

Song Wang is a lecturer of School of Business Administration, Northeastern University, Shenyang, China. His research interests include scientific and technological innovation, ecological environment and regional economics.

Dailing Hou

Dailing Hou is a student pursuing a bachelor degree of School of Business Administration, Northeastern University, Shenyang, China. Her research interests include regional innovation.

Yixin Guo

Yixin Guo is a student pursuing a bachelor degree of School of Business Administration, Northeastern University, Shenyang, China. Her research interests include environmental policy.

Liang Dai

Liang Dai is an associate professor of School of Public Administration, Nanjing University of Finance and Economics, Nanjing, China. Her research interests include urban networks and open innovation system, economic geography.