Abstract
This research delves into the impact of public education investment and advanced human capital structure on the innovation outputs at various processes of China's regional innovation value chains. Utilizing the spatial Dubin model, the study analyzes panel data from 30 provinces spanning from 2002 to 2020, distinguishing between the Research and Development (R&D) and Commercialization sub-processes in regional innovation. It reveals that public education investment significantly boosts R&D output directly and also positively influences commercialization output through spillover effects. This trend remains consistent over time. The study also uncovers regional variations in the effects of public education investment on innovation outputs between China's eastern regions and its central-western counterparts. This study does not find any evidence that public education investment leads to local advanced human capital structure. In terms of direct impacts, there appears to be a substitution effect between public education investment and the advanced human capital structure on local R&D outputs, while a more advanced human capital structure tends to negatively correlate with local commercialization outputs. Notably, the study indicates that the higher the level of advanced human capital structure, the more pronounced the negative impact of public education investment on local commercialization outputs. In light of the above findings, we believe that governments should increase public investment in education, but also recognize that investment alone is not enough. It is necessary to transform the education development model and establish a high-quality innovation system. Differentiated strategies for different regions should be implemented, and an appropriate investment compensation mechanism should be established to solve the problem of uneven investment returns. We also do not recommend blindly pursuing the advanced human capital structure. Only when investment in education is in line with the human capital structure will it produce the best results.
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