Technological innovation and structural change for economic development in China as an emerging market

Abstract

As an emerging and transforming market, China has emphasized the key role of technological innovation and industrial structural change in economic growth. Using a nonlinear econometric model and provincial data from 2000 to 2014, this study investigates the direction of technological innovation and structural change for driving China's economic growth. From a national perspective, an inverted U-shaped relationship exists between technological progress and economic growth, revealing a need to shift the technological progress approach from imitation to innovation. Once the turning point is reached, structural upgrading stimulates China's economic growth. Regional heterogeneity is apparent in regional regression. Both energy-saving and environmental conservation technologies positively contribute to the eastern and central regions’ economies, while only environmental conservation technology accelerates the western region's economic development. On structural adjustment, central areas should utilize industrialization and achieve sustainable development, whereas the eastern and western regions do not benefit from industrial structural change. The study's findings can be applied to design policies and strategies that could promote sustainable economic growth through technological innovation and structural change.