IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v16y2024i6p2365-d1356059.html
   My bibliography  Save this article

Regional Innovation and Sustainable Development Interplay: Analyzing the Spatial Externalities of Domestic Demand in the New Development Paradigm

Author

Listed:
  • Yufang Shi

    (School of Management, Xi’an University of Science and Technology, Xi’an 710054, China)

  • Yufeng Jiang

    (School of Management, Xi’an University of Science and Technology, Xi’an 710054, China)

  • Can Xie

    (School of Management, Xi’an University of Science and Technology, Xi’an 710054, China)

  • Cong Li

    (School of Management, Xi’an University of Science and Technology, Xi’an 710054, China)

Abstract

Building a great modern socialist country in all respects requires enhancing innovation capacity and establishing a new development pattern, especially in the context of sustainable development. This paper begins by analyzing the theoretical relationship between innovation and the spatial externality of domestic demand, constructing a theoretical model, and then empirically testing this model using provincial panel data from 2012 to 2020 through the Spatial Durbin model. The study underscores the importance of innovation in promoting sustainable economic growth, highlighting how it expands domestic demand through both supply and demand sides and positively affects the domestic demand in surrounding areas through spatial spillover effects. The empirical results reveal that innovation significantly boosts the level of domestic demand in the region and its environs, with the spatial spillover effect of domestic demand constituting 66.92% of the total effect. This underscores the relevance of spatial externality in sustainable economic planning. Innovation mainly stimulates domestic demand through consumption, aligning with sustainable consumption patterns, while exerting a moderate inhibitory effect on investment demand. The spatial externality of investment demand appears less significant. Overall, innovation drives the spatial externality of China’s domestic demand and significantly contributes to establishing a new development pattern of “dual circulation”, primarily focusing on the domestic cycle, within a framework of sustainable development. The paper concludes with policy recommendations that align innovation strategies with sustainable development goals.

Suggested Citation

  • Yufang Shi & Yufeng Jiang & Can Xie & Cong Li, 2024. "Regional Innovation and Sustainable Development Interplay: Analyzing the Spatial Externalities of Domestic Demand in the New Development Paradigm," Sustainability, MDPI, vol. 16(6), pages 1-15, March.
    • Handle: RePEc:gam:jsusta:v:16:y:2024:i:6:p:2365-:d:1356059
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/16/6/2365/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/16/6/2365/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-1037, October.
    2. Eckhardt Bode & Peter Nunnenkamp & Andreas Waldkirch, 2012. "Spatial effects of foreign direct investment in US states," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 45(1), pages 16-40, February.
    3. Barro, Robert J, 1990. "Government Spending in a Simple Model of Endogenous Growth," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 103-126, October.
    4. Litina, Anastasia & Makridis, Christos A. & Tsiachtsiras, Georgios, 2021. "Do product market reforms raise innovation? Evidence from Micro-data across 12 countries," Technological Forecasting and Social Change, Elsevier, vol. 169(C).
    5. Yufang Shi & Tianlun Zhang & Yufeng Jiang, 2023. "Digital Economy, Technological Innovation and Urban Resilience," Sustainability, MDPI, vol. 15(12), pages 1-19, June.
    6. Afrifa, Godfred Adjapong & Tingbani, Ishmael & Yamoah, Fred & Appiah, Gloria, 2020. "Innovation input, governance and climate change: Evidence from emerging countries," Technological Forecasting and Social Change, Elsevier, vol. 161(C).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Rao, B. Bhaskara, 2010. "Estimates of the steady state growth rates for selected Asian countries with an extended Solow model," Economic Modelling, Elsevier, vol. 27(1), pages 46-53, January.
    2. Iamsiraroj, Sasi, 2016. "The foreign direct investment–economic growth nexus," International Review of Economics & Finance, Elsevier, vol. 42(C), pages 116-133.
    3. Ingrid Ott & Susanne Soretz, 2006. "Governmental activity, integration, and agglomeration," Working Paper Series in Economics 57, University of Lüneburg, Institute of Economics.
    4. Schreiner, Lena & Madlener, Reinhard, 2022. "Investing in power grid infrastructure as a flexibility option: A DSGE assessment for Germany," Energy Economics, Elsevier, vol. 107(C).
    5. Carine Nourry, 2012. "Dasgupta, D.: Modern growth theory," Journal of Economics, Springer, vol. 105(1), pages 97-100, January.
    6. Fofack, Hippolyte, 2008. "Technology trap and poverty trap in Sub-Saharan Africa," Policy Research Working Paper Series 4582, The World Bank.
    7. Dimitrios Varvarigos, 2020. "Cultural Transmission, Education-Promoting Attitudes, and Economic Development," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 37, pages 173-194, July.
    8. Luca Gori & Luciano Fanti, 2009. "Right-to-manage unions endogenous growth and welfare," Economics Bulletin, AccessEcon, vol. 29(2), pages 903-917.
    9. Wilson, E.J. & Chaudhri, D.P., 2000. "Endogeneity, Knowledge and Dynamics of Long Run Capitalist Economic Growth," Economics Working Papers wp00-03, School of Economics, University of Wollongong, NSW, Australia.
    10. Smulders, Sjak & Gradus, Raymond, 1996. "Pollution abatement and long-term growth," European Journal of Political Economy, Elsevier, vol. 12(3), pages 505-532, November.
    11. B. Bhaskara Rao & Arusha Cooray, 2012. "How useful is growth literature for policies in the developing countries?," Applied Economics, Taylor & Francis Journals, vol. 44(6), pages 671-681, February.
    12. Martina Vukašina & Ines Kersan-Škabiæ & Edvard Orliæ, 2022. "Impact of European structural and investment funds absorption on the regional development in the EU–12 (new member states)," Equilibrium. Quarterly Journal of Economics and Economic Policy, Institute of Economic Research, vol. 17(4), pages 857-880, December.
    13. Ghate Chetan, 2003. "The Politics of Endogenous Growth," The B.E. Journal of Macroeconomics, De Gruyter, vol. 3(1), pages 1-18, August.
    14. Camilla Mastromarco & Léopold Simar, 2021. "Latent heterogeneity to evaluate the effect of human capital on world technology frontier," Journal of Productivity Analysis, Springer, vol. 55(2), pages 71-89, April.
    15. I. Hakan Yetkiner, 2006. "Saglik ile Buyume," Ege Academic Review, Ege University Faculty of Economics and Administrative Sciences, vol. 6(2), pages 83-91.
    16. Gustavo Marrero, 2010. "Tax-mix, public spending composition and growth," Journal of Economics, Springer, vol. 99(1), pages 29-51, February.
    17. Marion Payen & Patrick Rondé, 2020. "Culture, Institutions and Economic Growth," Working Papers of BETA 2020-18, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    18. Matilda Baret & Maxime Menuet, 2024. "Fiscal and Environmental Sustainability: Is Public Debt Environmentally Friendly?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 87(6), pages 1497-1520, June.
    19. ZAREEN, SHUMAILA & Qayyum, Abdul, 2014. "An Analysis of the Impact of Government Size on Economic Growth of Pakistan: An Endogenous Growth," MPRA Paper 85426, University Library of Munich, Germany, revised 2015.
    20. Charles R. Hulten & Robert M. Schwab, 1993. "Endogenous Growth, Public Capital, and the Convergence of Regional Manufacturing Industries," NBER Working Papers 4538, National Bureau of Economic Research, Inc.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:16:y:2024:i:6:p:2365-:d:1356059. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.