Basic research investment, innovation capability improvement, and economic growth efficiency

Abstract

This study explores the relationship between the proportion of basic research investment in R&D expenditure and regional economic growth efficiency and its influence path. A panel of data from 31 China’s provincial was analysed by the fixed-effects model over 2009 to 2019. Empirical results highlight that: (1) the increase in the proportion of basic research investment has a significant promoting effect on regional economic growth efficiency, but it presents an "inverted U-shaped" impact path. Meanwhile, the threshold effect model test results reveal that basic research investment plays a more significant role in promotion when the per capita income level exceeds a certain threshold. (2) The test results of the mediating effect model indicate that the improvement of the level of human capital is the intermediate channel through which the investment in basic research affects regional economic growth efficiency, while the mediating effect of the increase of knowledge storage on the process of the investment in basic research affecting regional economic growth efficiency is not supported by data. Potential policy measures are discussed.