Innovation-driven effect of the national value chain

The unified national market is continuously expanding. Against this backdrop, fully activating the innovation spillover effects of national value chain (NVC) participation and accelerating the establishment of a "new development paradigm with domestic circulation being the mainstay and the two circulations reinforcing each other" have become crucial pathways for building an independent and controllable modern industrial system.

This study utilized embedded multiregional input–output tables and provincial panel data to examine how NVC participation affects regional innovation performance across 30 Chinese provinces from 2007 to 2017. Fixed-effects models and robustness checks were employed to validate hypotheses. The threshold effect of intellectual property protection (IPP) was also examined. The core explanatory variable, NVC participation degree, was calculated using a production decomposition model based on input–output tables. This approach distinguishes between intraprovincial, national, and global value chains, enabling a nuanced assessment of NVC participation. Control variables, including economic development level, informatization level, openness degree, human capital, financial development, marketization, transportation infrastructure, and innovative industrial policies, were incorporated. The explained variable, research and development (R&D) capital stock, was measured using the perpetual inventory method, which accounts for the cumulative effect of R&D investments over time and provides an accurate reflection of innovation capabilities.

NVC participation significantly boosted regional innovation levels. The innovation-promoting effect was more pronounced in western regions and provinces with lower levels of participation in the global value chain. Moreover, an IPP threshold effect was observed: NVC participation yielded substantial innovation gains only when IPP reached a specific level. Stronger IPP reduced imitation risks, incentivized cross-regional knowledge sharing, and created stronger innovation incentives. When IPP was below the threshold, firms tended to prioritize capacity expansion over technological upgrades to protect their knowledge assets.

Deepening NVC collaboration within a unified national market is pivotal for innovation-driven growth. Policy implications include reducing administrative barriers to factor mobility, establishing cross-regional industrial alliances to bridge innovation gaps between eastern and western regions of China, and strengthening IPP frameworks to encourage NVC-driven innovation. These findings provide actionable insights for fostering dual-cycle synergies and achieving high-quality technological autonomy in China.