Why does regional innovative capability vary so substantially in China? The role of regional innovation systems

This paper empirically investigates the influence of a regional innovation system (RIS) on regional innovative capability in China. Differing from previous studies, we propose a two-step framework that firstly identifies the determinants of R&D and then tests the impact of RIS on regional innovative based on four hypotheses. The empirical results show that a region with higher ratios of private R&D and foreign-owned enterprise production, as well as closer interactions among industry, universities and academia, experiences superior innovative capability. By contrast, a higher ratio of state-owned enterprise R&D to total R&D lowers a region's innovative capability, due to the inefficiency of the state-owned enterprise R&D.