Technology-Based Relationship between Innovation and Growth

The economic effect of innovation, as one of the research focus in international innovation policy studies, are more and more frequently targeted on developing countries. This paper focuses on the innovation promotion impact to regional economic growth. The empirical study takes Guangxi district for an example to test the promotion impact by time serial analysis. All data covers the period of 1988-2005. Using patents application and GDP as proxy of innovation and regional economy, the empirical estimates reveal that increase in patenting leads to increase in economic growth for Guangxi district. The result shows that companies in the backward areas are inefficient patent application strategy and low patent transfer rates, and the innovation promotion impact to economic growth is more effective in short term than in long run. Western district in China should strengthen the degree of intellectual property rights (IPRs) protection, in order to create a legal environment that can stimulate more innovations.