The impacts of urban vitality and urban density on innovation: Evidence from China's Greater Bay Area

Abstract

Urban vitality and urban density have recently been the subject of intense debates in China, but their broader economic impacts have been neglected. Urban vitality can foster innovation by increasing interaction potential and efficiency, which can be amplified by the catalyst function of a favorable dense urban environment. This paper examines the impacts of urban vitality and density on innovation using a panel dataset for nine cities in the Greater Bay Area, which is one of the most prominent mega-city regions in China. The number of cafes is used to measure urban vitality and creation patent and utility model patent application to measure incremental and radical innovation, respectively. The current study has unveiled that urban vitality is positively associated with incremental and radical innovation. Results have indicated that one unit increase in the number of cafes is associated with a 3.92 and 7.29 unit increase in creation patent and utility model patent application, respectively. Moreover, urban vitality bolsters incremental innovation when urban density is high, while radical innovation benefits from urban vitality when urban density is low. These findings are robust to a set of sensitivity checks, including the use of various specifications and alternative datasets. We conclude with policy implications for innovation development from the perspective of urban vitality and urban density.