Do the High-Tech Industrial Development Zones Foster Urban Innovation? A Case Study of China

Abstract

China’s high-tech industrial development zones (HIDZs) is a key “place-based” policy targeting national innovation-driven development. Despite the extensive research on HIDZs, it remains unclear whether and to what extent the policy has fostered cities’ innovation output and quality. Basing our research on panel data of Chinese cities from 2001 to 2019, we employed the PSM-DID model to examine the impact of HIDZs policy on their host cities’ innovation output and quality. The empirical results show that: (1) In general, the establishment of HIDZs has a more significant positive effect on fostering urban innovation output compared to its role in promoting urban innovation quality. However, (2) the effect on urban innovation output and quality varies across different cities. For cities with more advantageous locations and policies, HIDZ policy plays a more instrumental role in promoting the quality of urban innovation, while the establishment of HIDZs in other cities is more conducive to increasing the output of urban innovation. Ultimately, we argue that authorities must recognize the importance of integrated development of HIDZs and their host cities and incorporating HIDZs’ impact on the host cities into the HIDZ evaluation. It is necessary to understand that HIDZs have multiple development modes due to their specific local conditions. Hence, differentiated guidance must be carried out rather than directly replicating the experience from developed regions.

1. Introduction

The high-tech industrial development zone (HIDZ), a Chinese version of the science park (SP), is strongly influenced by the SP found in the global North, especially Silicon Valley in the United States [1]. SP development has been acknowledged as an important policy tool for countries in promoting scientific and technological innovation capacity around the world [2]; essentially, it is an innovation-oriented spatial and institutional construction used to connect public scientific research institutions, enterprises and government [3,4,5]. Together with the integrated development in the cities and regions where it is located, SPs are also very effective in promoting the innovation and development of enterprises and industrial clusters [6,7].

As one of the five types of national Development Zones (DZ) in China, HIDZ policy originates from the “Torch Plan” carried out by the central government to promote high-tech transformation. Under the leadership of China’s Ministry of Science and Technology, the first batch of HIDZs were established in the 1980s and 1990s in large cities such as Beijing, Shanghai, Wuhan, etc.; the economic and social success of these HIDZs then stimulated the competition to establish HIDZs in many other cities. After China joined the WTO in 2001, the openness of economic and trade in inland China gradually increased, and the policy advantages of the various DZs were quickly reduced. The situation of attracting FDI with low cost advantage has become a bottleneck, and China must develop high-tech industries to get rid of traditional path dependence [8]. Under such circumstances, the Chinese government was obliged to find an endogenous innovative path and gradually reduce its dependence on foreign investment and technology [9], so HIDZs in many cities were given the responsibility of achieving industrial upgrading and technological innovation. By the end of 2020, 169 national HIDZs had been established with a preferential policy package, one which included financial support, taxation reduction, infrastructure construction and talent attraction [10].

In the context of China’s rapid modernization and urbanization, the HIDZs are not incidentally associated with technological innovation and industrial development [10,11]. On the one hand, HIDZ policy is a tool for the Chinese central government to use in fostering independent innovation promoting commercialization, industrialization and internationalization by focusing on high-tech achievements. Through the establishment of HIDZs around the country, China has realized an optimization of the national innovation pattern [10] and shifted its position in the global production network from the low end to the high end of global value chains to explore a more sustainable growth mode [12]. On the other hand, China’s HIDZs have taken a crucial part in their host cities’ urbanization and innovation-driven development. Over the past nearly 40 years, many HIDZs have been assumed to have played a role along the lines of “toss a stone to find out what’s ahead [Chinese idiom]” in urban space development. HIDZs had been proven as the first attempt in strategic urban space expansion, as they were often set outside traditional downtowns and could provide opportunities for cities to transcend their spatial constraints.

Although previous studies have improved our understanding of HIDZs, there are still issues that need to be further discussed. First of all, from the perspective of policy objectives, many studies have examined the performance of DZs in China [13,14,15], but different types of DZs have various policy objectives and socio-economic goals. Therefore, as one specific DZ target is fostering innovation, the promotional effects of HIDZ policy on urban innovation need to be further analysed to determine whether it has different impacts on the quantity and quality of urban innovation. Secondly, from the perspective of methodology, the differences in performance when setting up HIDZs in different types of cities on their innovative development need to be more finely identified. In order to conduct a targeted analysis of HIDZs, and so as to systematically explain whether China’s HIDZ has fostered multiple innovation in cities, and provide policy implications for HIDZ and the host cities in the context of spatial planning system reform in China, this study must include three aspects: theoretical review, empirical analysis, and policy inspiration. The theoretical review should form a complete conceptual framework through the analysis of existing research, the empirical analysis should use a quasi-natural experiment to explore the actual performance of HIDZ, and the policy implications should propose effective countermeasures for the integration and development of HIDZs and the development of the host cities. Based on the above research objectives, this paper will have the following steps: (1) exploring the influencing factors and paths of HIDZ on urban innovation through a review of existing theories and research; (2) measuring of the role of HIDZ in promoting increased output and quality of urban innovation and the heterogeneity of different cities; and (3) providing enlightenment for HIDZs’ and cities’ spatial development policies under China’s “dual circulation” development pattern.

The remainder of the paper is organised as follows. The next section summarizes the expected impact of HIDZ policy on urban innovation development and forms a research framework. The third section describes the research methodologies and data. The fourth section is the empirical analysis, and the last section concludes and discusses policy implications for the development of HIDZs and cities in China.

2. Conceptual Framework

2.1. Literature Review

Innovation plays an important role in promoting urban and regional economic development [16,17]. Science parks were recognized as spatial containers for bringing together innovative organizations such as firms, research institutions, and public services [18] and forming a unique regional innovation system. SP policy plays a pivotal role in promoting urban innovation. As a resource aggregation organization, it can foster commercialization and networking of technology and knowledge through the sharing of scientific research facilities, the promotion of talent exchanges, and among many other ways [4,19], so as to realize knowledge-based urban development [20]. At the same time, the improved infrastructure and preferential financial and tax policies provided by SP policy can increase the output and quality of innovation in the region by reducing transactional costs of various enterprises and attracting various market entities, especially small and medium-sized innovative enterprises [21].

The connotations of HIDZ policy in China have been discussed for a long time [10,22,23]. Firstly, it was regarded as the practice of international SP policy in China after the reform and opening up. It was a linkage space designed to realize local scientific innovation and industrial development, as well as the promotion of scientific and technological innovation and industrial upgrading nationwide [21,24]. Secondly, it represented a further exploration process of the DZ development mode, influencing by the innovation-driven strategy in China, a means under which the government not only promotes measures to streamline administration and delegates power for HIDZ, but also implements preferential policies for specific high-tech industries [10]. Moreover, HIDZ is known as an important functional area of the city where it located. It is the spatial carrier for pluralistic growth and innovation goals, including, but not limited to, economic growth, openness improvement, and the upgrading of science and technology [14,25]. It can be seen that all of the above studies belong to the interpretation of HIDZ from different perspectives. In essence, as a fusion of various opening-up and industrial policies after China’s opening up, HIDZ’s spatial construction and institutional improvement has had multiple economic and social effects.

SP policy is regarded as an important policy tool used to promote local innovation linkages and economic growth in both developed countries [2,6] and developing countries [21,26]. As the technology industry and urban spatial carrier with the closest function to SP in China, HIDZ policy has a diverse impact on the host city. A thorough understanding of several types of impacts of HIDZ on local economic activities can help us explain how it promotes the output and quality of urban innovation.

First, the establishment of HIDZ can generate an agglomeration effect and scale economies which are crucial for urban innovation. The discussion of the agglomeration economy has appeared in many studies on the performance of DZs [15,27,28]. The agglomeration economy brought by geographical proximity improves the face-to-face exchange opportunities for enterprises and talents and promotes local knowledge transfer. Therefore, some researchers evaluating the performance of SP policy have also emphasized the importance of agglomeration [29,30]. Compared with other types of DZ in China, the HIDZ emphasizes the spatial agglomeration of high-tech enterprises and research institutions, making it play a significant role in urban innovation output [31] and as a land use utility [32], etc. However, some studies also have different views and point out that HIDZ can not directly stimulate the generation of innovation; it can just attract FDI and integrate regional economic activities into the global value chains [24]. This may mean that the rapid development of HIDZ is only achieved through high intensity capital investment and large-scale infrastructure construction, but it does not truly stimulate the generation and development of local innovation activities.

Secondly, the establishment of HIDZs and the implementation of relevant policies provides direct financial benefits for enterprises. For example, certified high-tech enterprises in HIDZs can implement a preferential tax rate of 15% (25% before recognition); one-time financial support will be provided to high-tech enterprises newly registered/introduced into HIDZs (Shanghai will provide RMB 250,000 in 2022). At the same time, with higher management authority, an HIDZ’s management committee often has the power to offer convenient project approval and bank credit services for enterprises in the park [15]. In addition, the government has also provided different kinds of incentive policies for talents, which enables the HIDZ to attract researchers from universities or scientific institutions. Through the above series of preferential policies, the HIDZ can not only attract R&D branches of large domestic and foreign companies, but also facilitate the incubation of companies in emerging industries. Of course, this is only the initial effect of policy implementation. It is worth thinking after the expiration of the relevant policy whether the productivity of regional enterprises and the economic vitality of cities have been continuously improved or the benefits have gradually been extended to other regions.

In addition, the establishment of an HIDZ will have a selection effect on the development of space and the settlement of enterprises. On the one hand, the establishment of a national HIDZ is no longer about creating an industrial park in the urban fringe, but about upgrading the existing industrial parks in the city. In this process, local governments would select urban areas with a better industrial base, convenient transportation and sufficient space for development, and submit applications to higher governments. On the other hand, all kinds of DZs in China have distinct admittance criteria for selection of enterprises, including investment intensity of fixed assets per unit area, annual output intensity, etc. [32]. HIDZ policy also has clear regulations on the industrial types of enterprises and prefers enterprises that conform to the regional industrial development plans. It can be seen that the evaluation of industries and enterprises by the HIDZ policies, to a certain extent, prevents firms with low added value, low production efficiency and potential environmental pollution from entering HIDZs.

The above three effects are the direct impacts of the implementation of HIDZ-related policies on local economic activities. Based on these impacts, HIDZ has corresponding spillover effects on the technological innovation in the cities, and the positive or negative paths are as follows. First of all, through the agglomeration effect, HIDZ will enable a large number of market entities, including high-tech enterprises, as well as universities, incubators, and other institutions, to become concentrated within the HIDZ’s boundaries in order to reduce the overall development and construction cost of the city, and to promote the knowledge exchange between technology, talents and enterprises to achieve the generation and diffusion of innovation. In particular, HIDZs in China often includes many sub-zones, for example Zhangjiang HIDZ in Shanghai have 22 sub-zones, Zhongguancun HIDZ in Beijing have 16 sub-zones, and these layout patterns are conducive to foster the innovation output of various industrial functional areas in the city. However, there are also some enterprises that may only be pursuing “policy rent” and not communicating and cooperating with other economic units in the HIDZ [33]. At the same time, excessive competition and increased costs in specific areas may also lead to diseconomies of agglomeration [34]. Secondly, through the policy’s effect, all types of innovative enterprises attracted by the HIDZ may come from abroad or from outside the region, or the listing may just be the address changes of local enterprises in pursuit of fiscal and tax preferences. The former situation is helpful for the city in obtaining higher competitiveness in regional industrial competition and innovative development, while the latter may lead to the decline of the attractiveness and the deterioration of business environment of non-park areas within the city. It may lead to a concentration of economic activity in a certain area in the city, potentially exacerbating spatial inequalities. In addition, the establishment of enterprises’ admittance and withdrawal mechanisms has screened and controlled the investment intensity and output level of enterprises in the park, which helps maintain the sustainable competitiveness of HIDZ as a regional industrial highland. However, the threshold set by the government is not conducive to the development of SMEs, and it is difficult for new cities to be inclusive of entrepreneurs and young technical talents. This is likely to hinder their potential innovation, which is formed by their interactions, which will have a certain negative impact on the diversification of urban technological innovation.

Notably, the impacts of the above three effects on urban innovation output may differ for various types of cities. Firstly, HIDZ policy in different regions has diverse urban economic bases and industrial development levels. In particular, coastal provinces have benefited from the opening-up policies earlier than have the inland provinces, leading to significant disparities in development stages in the eastern, central and western regions. Secondly, with the regionalization process, the urban agglomeration has become an important spatial form for China’s promotion of urbanization and integrated development. Among all the urban agglomerations in China, Beijing-Tianjin-Hebei, Yangtze River Delta, Pearl River Delta, and Chengdu-Chongqing are recognized as the most developed, and have greater development potential than do other regions. In addition, the overlaying of national DZ policies in the same city deserves more of the researchers’ attention. In China, the HIDZ and the Economic and Technological Development Zone (ETDZ) are the two types of DZ with the largest spatial scale, both of which have preferential policies in terms of land use, finance and taxation; however, due to the differences in development policy objectives and industry-leading types, many DZ-related studies discuss the two types separately [35]. In a word, the heterogeneity of the positive effect of HIDZ on these cities should be tested.

2.2. Conceptual Framework and Research Hypotheses

Based on a literature review, a conceptual framework is proposed (Figure 1), summarizing the impacts of HIDZs on the quantity and quality of urban innovation. Through the combination of agglomeration effects, policy effects, and selection effects, HIDZ policy has influenced the spatial layout of various innovation entities in cities and regions, gathering a large number of scientific research institutions and large enterprises within the boundaries of the HIDZ. Existing research has shown that large-scale infrastructure investment in the early stages of development zone construction, as well as the improvement of technological service facilities during the development process, will greatly reduce the operating costs of various market entities, enabling innovative entities to gather in or around the HIDZ [27]. This feature can not only promote cooperation and competition between enterprises of the same type, but can also achieve knowledge spillover and personnel exchanges between different types of enterprises, and may promote the formation of local innovation ecosystems [7]. Under the influence of the above multiple effects, HIDZ is also seen as a growth pole that promotes economic growth and social development in cities and regions [24], driving the cities where it is located to produce more innovative results, and significantly improving the quality of innovation, thereby winning in the urban competition in the region. In addition, due to differences in regional layout, development stages, and overlapping industrial policies, the impact on urban innovation of setting up HIDZ in different cities is also different.

In the context of spatial integration between an HIDZ and the city where it is located, the HIDZ is no longer the industrial enclave or new town at the urban fringe, but instead the important platform for scientific and technological innovation and industrial transformation that the city must rely on. Since the start of the new century, a large number of HIDZs have been set up in medium-sized cities, which directly promotes the development of local urbanization and the expansion of built space (Figure 2). At the same time, different HIDZs have different degrees of promotional effects on the quantity and quality of urban innovation: on the one hand, the urban innovation quantity represents an improvement upon various urban innovation activities; on the other hand, the urban innovation quality represents the improvement on the level of urban innovation capability. Therefore, the difference in the effect between the quantity and quality, and its heterogeneity in different cities should be identified, thus providing reference for HIDZ and urban development policies. At present, many studies have demonstrated that HIDZ has a positive spillover effect on local firm productivity and manufacturing employment growth in adjacent areas [27], and significant findings have been accumulated in the field of HIDZ driving regional development [36,37].

However, there are still some issues worth further discussion. First of all, China’s HIDZ construction mode has changed from the traditional “new establishment” in the urban fringe to the “upgrading” of existing industrial parks in the city since the new century, so it is necessary to measure whether the establishment of HIDZ has promoted the quantity and quality of innovation in the host city. Secondly, the government has carried out HIDZ evaluation for many years and has recognized regional heterogeneity, so the impacts of HIDZ in different types of cities, including the different regions and multiple industrial policies, should be identified and discussed. In order to better organize empirical research and verify the above conceptual framework, the following two basic research assumptions are proposed: (1) The literature summarizes the possible positive and negative impacts of HIDZ on the economic activities of the city where it is located, but in general, it has a relatively obvious positive role in promoting the urban innovation of the city. (2) Different cities in China have different development stages, regional conditions and policy inputs, so the effectiveness of an HIDZ establishment should be significantly different in terms of the quantity and quality of innovation.

3. Methodology and Data

3.1. The Measurement Model

3.1.1. The Difference in Difference (DID) Model

To explicitly establish quantitative improvements in innovation output and quality obtained by the HIDZ, we used a difference-in-difference (DID) model that is widely used in urban policy evaluation [27,38,39]. The specific methods are as follows: Firstly, the cities that set up a HIDZ which upgraded from the provincial development zone from 2001 to 2019 were taken as the treatment group, while cities with provincial development zones not upgraded at the same time were taken as the control group. Secondly, the PSM (propensity score matching) method was used to screen cities with similar characteristics between the treatment group and the control group based on urban characteristic variables, in order to estimate the impact of the HIDZ more accurately on the innovation output of the city. In addition, based on the basic regression analysis, we tested the heterogeneity of cities: whether different regions, whether they belong to major urban agglomerations, and whether the same city has an ETDZ. Finally, based on the analysis’ conclusion, the paper discusses the development of high-tech zones and the relevant planning enlightenment of urban innovation policies. The specific estimating equation is as follows:

Y_it = β₀ + β₁·dp·dt + αC_ct + γ_t + μ_c +ε_ct

(1)

where the dependent variable Y is the indicator of quantity and quality of innovation output; subscript c is the city; t is the year of observation; dp is the dummy variable of HIDZ establishment, dt = 1 if a HIDZ in the city and dp = 0 otherwise; and dt is the time dummy variable and dt = 1 in the period after establishing HIDZ. The coefficient β₁ of dp and dt measures the change in the independent variable Y before and after the establishment of HIDZ in a city, reflecting the actual effect of the policy on Y. C_it is other control variables that may affect innovation output in city c and year t; μ_c represents fixed city effect; γ_t is fixed year effect; ε_ct is a residual; and β₀ is a constant value.

3.1.2. The Propensity Score Matching (PSM) Model

The DID model needs to ensure that samples in the treatment and control groups are randomly selected to avoid possible selectivity bias; this study used the propensity score matching (PSM) method, which is the method for reducing data bias in research observations [37], to obtain the similar sample cities. In reality, the cities approved by the central government to set up HIDZs are not random selections, and these cities generally have more developed secondary industry, sufficient labour force and foreign investment. Therefore, the logistic regression was used to calculate the propensity score of cities to establish HIDZ by using four indicators as variables, including the proportion of secondary industry, the number of industrial enterprises above designated size, the number of urban employees and foreign direct investment, and then screening cities with similar development in the treatment and the control group. The following equation was used to estimate the propensity score of the cities with HIDZ:

$$\mathrm{Logist}\left(dp=1\right)={\lambda }_0+\alpha {\mathrm{C}}_{\mathrm{it}}+{ \mathsf{\gamma }}_t+{\mathsf{\mu }}_i+{\mathsf{\epsilon }}_{\mathrm{it}}$$

(2)

where dp is the same dummy variable of HIDZ establishment as in Equation (1). C’s four explanatory variables are mentioned above. μ_i represents fixed city effect; γ_t is fixed-year effect; ε it is a residual; ${\lambda }_0$ is a constant value. Based on the Equation (2), we calculated the propensity score of each city to establish an HIDZ, and then selected cities with the closest scores to each city in the control group. Finally, we identified 33 cities in the treatment group and another 61 in the control group for subsequent DID tests.

3.2. Indicator Explanation

3.2.1. Dependent Variable

The dependent variable of this study is the level of urban innovation. We chose the number of invention patents and the knowledge complexity index (KCI) in cities as two indicators to measure urban innovation output. The former reflects the quantity of urban innovation, while the latter reflects the quality of urban innovation. The number of patents provides a rich and potentially useful source of information for research activities; compared with patent authorization, the number of patent applications can reflect the dynamic behaviour of market players more promptly, so it is more suitable as an indicator to measure a city’s technological innovation. Therefore, we referred to relevant research and chose the number of invention patent applications as the quantitative indicator of innovation output [38]. For the measurement of the quality of urban innovation, we referred to the relevant methods used by Hidalgo and Hausmann to study the technical complexity of products [40] and calculated the city’s patent-based KCI using patent information as the dependent variable. For specific methods, referring to the research of Balland [41], the calculation method is as follows:

Firstly, for each city c and technology i, calculate the comparative advantage of the number of patents of in a specific technology field using the calculation method as follows:

$$M_{c,i}=1if \frac{Paten{t}_{c,i}/{\sum }_{i}Paten{t}_{c,i}}{{\sum }_{c}Paten{t}_{c,i}/{\sum }_{c,i}Paten{t}_{c,i}}>1$$

(3)

$$M_{c,i}=0 if \frac{Paten{t}_{c,i}/{\sum }_{i}Paten{t}_{c,i}}{{\sum }_{c}Paten{t}_{c,i}/{\sum }_{c,i}Paten{t}_{c,i}}<1$$

(4)

Based on $M_{c,i}$, the diversity and ubiquity of technological innovation in city can be calculated, that is, the number of technologies with comparative advantages in the city $K_{c,0}$ and the number of cities where the technology is a comparative advantage technology $K_{i,0}$. The $KC{I}_{city}$ and $KC{I}_{tech}$ can be obtained by multiplying the diversity and ubiquity indicators for n iterations until the final ranking is stable; the calculation method is as follows:

$$K_{c,0}={{\displaystyle \sum }}_i{M}_{c,i}$$

(5)

$$K_{i,0}={{\displaystyle \sum }}_r{M}_{c,i}$$

(6)

$$KC{I}_{city}=K_{c,n}=\frac{1}{K_{c,0}}{{\displaystyle \sum }}_i{M}_{c,i}{K}_{i,n-1}$$

(7)

$$KC{I}_{tech}=K_{i,n}=\frac{1}{K_{i,0}}{{\displaystyle \sum }}_i{M}_{c,i}{K}_{c,n-1}$$

(8)

3.2.2. Core Explanatory Variables

We took the interaction items of dummy variables dp and dt as the core explanatory variables to measure the effectiveness of establishing HIDZ on the quantity and quality of innovation of the city. Considering that there is a time lag between the promulgation and the implementation of the HIDZ policy, namely the “lag effect”, for HIDZs established in the first half year (from January to June), we set dt = 1 for the year of establishment and subsequent years, while for HIDZs established in the second half year (from July to December), we set dt = 1 for the next year of establishment and subsequent years. We will compare the confidence level and estimate the value of the core explanatory variables to explore the effectiveness of HIDZ policy on the quantity and quality of innovation output of the city.

3.2.3. Control Variables

Besides the establishment of HIDZs, the innovation output is affected by many other factors. In the measurement of the DID model, this study selected the indicators of the development characteristics and the level of external connection of the city as the control variables. The selection of indicators related to urban development characteristics drew on previous research [42,43,44]. On the one hand, it included the size and structure of the city, so the total population and the ratio of tertiary and secondary industries were adopted. On the other hand, it also included the factor of input to the city, so fixed assets, FDI and government fiscal expenditure were adopted. In terms of the city’s external connection level, some studies have pointed out that business travel can promote innovation and technology transfer [45]. Based on the construction of international airports and high-speed railway stations in the city, the two dummy variables, whether there is an international airport and whether there is a high-speed railway station in the city this year, were taken as the control variables representing the level of the city’s external connection (

Table 1. The variables in PSM-DID model and their calculation methods.

Types	Variable	Variable Meaning	Calculation
Dependent Variable	Y1	Quantity of Innovation output	The logarithm of (number of invention patent applications + 1)
	Y2	Quality of Innovation output	KCI of cities
Core explanatory variables	dp	Whether there is an HIDZ in the city	Dummy variable (0,1)
	dt	Before or after establishment of HIDZ	Dummy variable (0,1)
Control Variables	LnPop	Population size of the city	The logarithm of population
	Stru	Industrialization level	Secondary industry output value/tertiary industry output value
	LnRei	Real estate investment level of the city	The logarithm of real estate investment
	LnFdi	Foreign capital investment level of the city	The logarithm of (FDI + 1)
	LnExp	Government financial level of the city	The logarithm of (expenditure + 1)
	Airport	Whether there is an international airport in the city	Dummy variable (0,1)
	HSR	Whether there is an HSR station in the city	Dummy variable (0,1)
	Industry	Industrialization level	Secondary industry output value/GDP*100
	LnEmp	Number of employees in the city	The logarithm of number of employees

).

3.3. Descriptive Statistics

Among the various data used in this study, the time of the establishment of HIDZs in the cities of the treatment group was compiled from the Directory of Chinese Development Zones Approval Announcement (2006/2018 Edition). The number of invention patent applications came from a data platform based on China National Intellectual Property Administration, while the data on urban population, fiscal expenditure and so on came from the Chinese City Statistical Yearbook (2001~2020). We found some data errors in the Chinese City Statistical Yearbook during the study and revised them in combination with local statistical yearbooks and bulletins. Before analysis, all data was coded and cleaned, mainly including: (1) Making the data correspond to the administrative divisions in 2019, and revising the cities that had changed their names (for example, Xiangfan became Xiangyang) or adjusted their divisions (for example, Laiwu was merged into Jinan); (2) For some missing data, first querying the local statistical yearbook of each city for the supplement, and then obtaining the data that is still unavailable by interpolation; (3) In order to improve the accuracy of estimation, deleting the cities that have set up HIDZ in the study period but had HIDZ in previous years. The descriptive statistical results of the data finally included in the PSM-DID model are as follows (

Table 2. The descriptive statistics of original data.

Variable	N	Max	Min	M	SD
Y1	1957	9.96	0.00	4.71	2.00
Y2	1957	4.62	0.00	3.61	1.44
dp·dt	1957	1.00	0.00	0.14	0.35
LnPop	1957	7.14	3.70	5.97	0.60
Stru	1957	4.93	0.34	0.89	0.40
LnRei	1957	16.65	8.47	13.12	1.52
LnFdi	1957	13.02	0.00	9.37	2.01
LnExp	1957	16.69	9.45	13.92	1.12
Airport	1957	1.00	0.00	0.17	0.37
HSR	1957	1.00	0.00	0.25	0.44
Industry	1957	73.45	11.70	46.38	9.74
LnEmp	1957	5.40	1.98	3.47	0.59

).

4. Results

4.1. Basic Analysis

From the overall level, we tested the actual effect of the establishment of HIDZ on the quantity and quality of urban innovation (

Table 3. Estimation results (universal impact).

Column		1	2	3	4	5	6
Dependent Variable		Patent			KCI
Core explanatory variables		0.3403 ***	0.3133 ***	0.2942 **	0.1308 **	0.1407 **	0.1305 **
Control	LnPop	-	1.0659	0.9026	-	0.0598	−0.0192
variables	Stru	-	−0.1517	−0.1546	-	0.0679	0.0680
-	LnRei	-	0.1712 **	0.1691 **	-	0.0210	0.0209
-	LnFdi	-	−0.0177	−0.0161	-	−0.0104	−0.0089
-	LnExp	-	0.0813	0.0917	-	−0.1468 **	−0.1460 **
-	Airport	-	-	0.1585	-	-	0.1102
-	HSR	-	-	0.2070 **	-	-	0.1278 **
Year effect		yes	yes	yes	yes	yes	yes
City effect		yes	yes	yes	yes	yes	yes
p value		0.005	0.007	0.012	0.02	0.015	0.022
R2		0.8907	0.8948	0.9004	0.5828	0.5868	0.5927
observation		1786	1786	1786	1550	1550	1550

***, **, * means that the coefficient is significant at the level of 1%, 5% and 10%.

). Columns 1 and 4 of the preliminary regression results show that the establishment of an HIDZ has significantly increased the number of invention patents and the quality of invention at the level of 1% and 5%, respectively. Including the control variables reflecting the characteristics of urban development (columns 2 and 5) and the regional connection level (columns 3 and 6), we can find that the positive promotion of an HIDZ on urban innovation can remain significant at the level of 5%, and the impact of the quantity and quality of innovation can reach 29.42% and 13.05%, respectively. The analysis shows that the overall effect of establishing an HIDZ upon urban innovation development in Chinese cities is consistent with its initial policy objectives, and it does have a significant positive impact on the quantity and quality of urban innovation.

The premise of using the DID model is to pass the parallel trend test to ensure the robustness of the regression results. That is, before the actual implementation of an HIDZ policy, there should be no significant difference in quantity or quality of urban innovation between the treatment group and control group cities. So, we assume that establishment of the HIDZs will be 1–3 years ahead and behind and observe the regression results, and

Table 4. Counterfactual test of the impact of the establishment of HIDZs on patents and KCI.

N Year before		−3	−3	−2	−2	−1	−1
Patent	coefficient	0.0692	0.0995	0.0354	0.0512	−0.0027	0.0045
	p-value	0.365	0.203	0.608	0.448	0.952	0.918
	Observations	1786	1786	1786	1786	1786	1786
KCI	coefficient	−0.0805	−0.0693	−0.0598	−0.0601	0.0353	0.0366
	p-value	0.053	0.106	0.144	0.138	0.296	0.31
	Observations	1550	1550	1550	1550	1550	1550
Significant or not		not	not	not	not	not	not
control variable or not		no	yes	no	yes	no	yes
N year after		1	1	2	2	3	3
Patent	coefficient	0.0940 *	0.1003 **	0.1187	0.1027	0.1627	0.1489
	p-value	0.056	0.041	0.236	0.32	0.183	0.228
	Observations	1786	1786	1786	1786	1786	1786
KCI	coefficient	−0.0081	0.0009	0.0243	0.0301	0.1253 ***	0.1331 ***
	p-value	0.923	0.991	0.675	0.601	0.01	0.006
	Observations	1550	1550	1550	1550	1550	1550
Significant or not		yes	yes	not	not	not	not
control variable or not		no	yes	no	yes	no	yes

The judgment basis of parallel trend test is whether it is significant at the 95% level. ***, **, * means that the coefficient is significant at the level of 1%, 5% and 10%.

indicates that there was no significant difference in the number of invention patents and KCI between the treatment group and the control group before the actual establishment of HIDZ. This verifies the parallel trends hypothesis, and the conclusion of DID analysis is robust. At the same time, we also found that KCI will significantly improve in the third year after the establishment of HIDZ, indicating that the quality of innovation output needs a certain amount of time to achieve rapid improvement.

4.2. Analysis of Heterogeneity Test

4.2.1. Heterogeneity of Three Regions

The resource endowments and other development conditions of the three major regions—east, central, and west China—are quite different, and the opening-up policy and the development of market economy are also gradually expanding from the east to the west, so the government has given them different missions and imposed different policy guidance. In this context, the establishment of HIDZs and their effects on urban innovation will also have regional heterogeneity. In the following, the cities where the HIDZ is located are divided into three major regions, to compare their differences in spillover effects in different regions. The analysis shows (

Table 5. The effects of HIDZs on cities in various regions in China.

Dependent Variable	Patent						KCI
Region 1	East		Central		West		East		Central		West
Dependent variable	0.2797 *	0.2131	0.3347	0.2960	0.4692	0.2321	0.1026 **	0.0853 *	0.0594	0.0694	0.2179	0.1332
robust standard error	0.1438	0.1337	0.2261	0.1967	0.3133	0.2636	0.0451	0.0452	0.1107	0.1018	0.2183	0.2249
R2	0.9268	0.9334	0.8776	0.8969	0.8605	0.8748	0.7113	0.7203	0.6123	0.6242	0.5827	0.5998
p value	0.059	0.119	0.147	0.141	0.158	0.394	0.028	0.066	0.595	0.5	0.336	0.564
observations	798	798	722	722	266	266	732	732	600	600	218	218
Control variables	no	yes	no	yes	no	yes	no	yes	no	yes	no	yes
Year effect	yes	yes	yes	yes	yes	yes	yes	yes	yes	yes	yes	yes
City effect	yes	yes	yes	yes	yes	yes	yes	yes	yes	yes	yes	yes

***, **, * means that the coefficient is significant at the level of 1%, 5% and 10%. ¹ The eastern region includes provinces: Jiangsu, Zhejiang, Fujian, Shandong, Guangdong, Hebei, Liaonin, Hainan; The central region includes provinces: Shanxi, Jilin, Heilongjiang, Anhui, Jiangxi, Henan, Hubei, Hunan; The western region includes provinces: Neimenggu, Sichuan, Guizhou, Yunnan, Xizang, Shanxi, Gansu, Qinghai, Ningxia, Xinjiang, Guangxi.

) that the HIDZs in the eastern region significantly promote the number of invention patents and the urban KCI in their cities at the level of 10%. It shows that the establishment of HIDZs in eastern cities in the past 20 years has significantly promoted the quality and quantity of innovation and achieved the initial policy objectives. For the central and western regions, the establishment of HIDZs has not significantly promoted urban innovation, which should be related to their low level of urban construction and the imperfect innovation environment.

4.2.2. Heterogeneity of Cities within Four Major Urban Agglomerations

As the 21st century began, China has put forward and implemented a number of strategies to promote regional coordinated development. Well-developed urban agglomerations have thus become leading practitioners of such strategies. Considering whether the cities where the HIDZ is located are in the four major urban agglomerations of Beijing-Tianjin-Hebei (BTH), Yangtze River Delta (YRD), Guangdong-Hong Kong-Marco Greater Bay Area (GBA), and Chengdu-Chongqing Economic Circle (CCEC), we compare and analyze the difference of the effect of HIDZs in different cities. The analysis shows (

Table 6. HIDZ’s effects given whether it belongs to the four major urban agglomerations.

Dependent Variable	Patent						KCI
Megalopolis or Not	YES		No		HIDZ * Megalopolis		YES		No		HIDZ * Megalopolis
Core explanatory variables	0.1511	0.1595	0.4436 ***	0.3204 **	0.2617 *	0.19102	0.1187 **	0.0964 *	0.1469 *	0.1372 *	0.0488	0.0509
p value	0.394	0.303	0.005	0.014	0.072	0.15	0.041	0.067	0.056	0.082	0.5	0.479
HIDZ * Megalopolis	-	-	-	-	0.2123	0.2732	-	-	-	-	0.2189 ***	0.2077 **
R2	0.9211	0.9281	0.8795	0.8958	0.891	0.8965	0.6051	0.6288	0.612	0.6214	0.5871	0.5965
observations	646	646	1140	1140	1786	1786	600	600	950	950	1550	1550
Control variables	no	yes	no	yes	no	yes	no	yes	no	yes	no	yes
Year effect	yes	yes	yes	yes	yes	yes	yes	yes	yes	yes	yes	yes
City effect	yes	yes	yes	yes	yes	yes	yes	yes	yes	yes	yes	yes

***, **, * means that the coefficient is significant at the level of 1%, 5% and 10%.

) that for cities in the four major urban agglomerations, the promotion effect of the establishment of HIDZs on the growth of the number of invention patent applications is not significant, while, for other cities, the establishment of HIDZs can significantly promote the growth of the number of invention patent applications, and its promotion effect can reach 32.04% when adding control variables. At the same time, it can be found that the promotion of the establishment of HIDZs on urban KCI is significant in cities within the urban agglomeration or other cities, but it is greater for other cities. In addition, the interaction item between whether a city has set up a HIDZ and whether it belongs to the four major urban agglomerations (HIDZ * Megalopolis) is included in the benchmark regression model, and the analysis conclusion also confirms that the city’s location within the four major urban agglomerations has no significant impact on the quantity of innovation, but has a significant impact on the quality of innovation.

4.2.3. Heterogeneity of Whether have ETDZ in the City

In China’s development zone system, the HIDZ and the ETDZ are the two most representative national development zones, with enormous scale and the most comprehensive functions. Unlike an HIDZ, the purpose of an ETDZ is to attract foreign investment and promote import-export-oriented industries [46]. If a city has both an HIDZ and an ETDZ, it will have many links with the city’s industrial development and technological innovation activities. We divide the sample cities into those with an HIDZ and those non-HIDZ and compare the effects of an HIDZ on urban innovation.

Table 7. HIDZ’s effects based on whether the host city had an ETDZ at the same time.

Dependent Variable	Patent
Whether Have ETDZ	Yes	Yes	No	No	HIDZ * ETDZ
Core explanatory variables	0.1941	0.1349	0.3925 ***	0.2913 **	0.2803 **	0.228 *
p value	0.37	0.533	0.008	0.024	0.031	0.057
HIDZ * ETDZ	-	-	-	-	0.1789	0.1978
R2	0.9103	0.9151	0.8849	0.8977	0.891	0.8963
observations	570	570	1216	1216	1786	1786
Control variables	no	yes	no	yes	no	yes
Year effect	yes	yes	yes	yes	yes	yes
City effect	yes	yes	yes	yes	yes	yes
Dependent Variable	KCI
Whether Have ETDZ	Yes	Yes	No	No	HIDZ * ETDZ
Core explanatory variables	0.2104 ***	0.2051 ***	0.0828	0.0781	0.0562	0.0610
p value	0.002	0.002	0.281	0.314	0.395	0.351
HIDZ * ETDZ	-	-	-	-	0.2153 ***	0.2009 ***
R2	0.6477	0.6572	0.5851	0.5976	0.5883	0.5974
observations	534	534	1016	1016	1550	1550
Control variables	no	yes	no	yes	no	yes
Year effect	yes	yes	yes	yes	yes	yes
City effect	yes	yes	yes	yes	yes	yes

***, **, * means that the coefficient is significant at the level of 1%, 5% and 10%.

shows that the establishment of HIDZs in cities in the cities with an ETDZ has no significant role in promoting the number of invention patents, and the establishment of HIDZs in cities without an sETDZ can significantly promote the growth of the number of invention patents, and the effect after adding control variables can reach 29.13%. At the same time, the establishment of HIDZs in cities with economic development zones has significantly improved the KCI in the city, and the effect after adding control variables can reach 20.51% at the 1% significance level, while the establishment of HIDZs in cities without ETDZ has no significant impact on the KCI.

At the same time, on the basis of the benchmark regression model, the interaction items of “whether there are high-tech zones” and “whether there are economic development zones” (HIDZ * ETDZ) in the sample cities are included to further test, so as to examine the marginal effect characteristics of the superposition of multiple policies of development zones on urban innovation. It can be found that the co-existence of HIDZs and ETDZs does not improve the quantity of innovation, but significantly improves the quality of innovation (20.09%). This comparative analysis shows that the establishment of an HIDZ in cities that already have an ETDZ does not significantly improve the growth of the number of patents in cities and the marginal benefits of its policy superposition decrease, but it can significantly improve the quality of innovation. This also confirms that these two types of development zones have a “zero-sum game” phenomenon on urban innovation quantity, however, their simultaneous establishment in a city will help improve urban innovation quality.

5. Policy Implications and Conclusions

5.1. Implications on the Spatial Planning Policy of HIDZs and Their Host Cities

HIDZs epitomize the close relationship between governmental power and urbanization, and have become an organizational form for spatial production in China [10]. In the large-scale development and expansion of cities after China’s reform and opening up, HIDZs are often regarded as special economic zones for bearing the expansion of urban space, receiving FDI and expanding production scale. At the stage of innovation-driven development in China, especially after the establishment of the spatial planning system in recent years, HIDZs have the responsibility to integrate their own construction with urban innovation through policy design and institutional reform, and continue to lead the quantitative growth and quality improvement of urban science and technology. Based on the research conclusions, the following implications for China’s HIDZ practice are generalized.

5.1.1. Optimize the Regional and Urban Layout of HIDZs

Since the launch of the reform and opening up policy, a multitude of cities in China have experienced significant urban industrial growth through the establishment and development of DZs. In the new era of promoting innovation-driven development, HIDZs continue to be a policy tool for both central and local governments to achieve high-tech industrialization. Our research has shown that the establishment and distribution of HIDZs in the new century is the result of the central government’s taking into account both the “efficiency” and the “fairness” of regional innovation and development. The 14th Five-Year Plan for the development of HIDZs, released by the Ministry of Science and Technology in 2022, proposes that the number of national HIDZs will reach approximately 220 by 2025, covering most prefecture-level cities in the east, as well as important prefecture-level cities in the central and western regions. Therefore, in the next five years, the central government should carefully evaluate the necessity and effectiveness of establishing HIDZs in different cities, and develop HIDZs with varying development goals, rather than directly copying the experiences of developed regions in less developed ones.

It is essential to note that there are different types of HIDZs around the world [2], and it is crucial to conduct a detailed investigation into the performance of various HIDZs in different regions. When establishing new national HIDZs or upgrading from provincial industrial parks, the development stages and resource endowments of the region or city should be carefully investigated. In developed regions, the establishment of HIDZs should prioritize improving the regional innovation network, overcoming technical bottlenecks in the supply chain, and driving innovation development in specific industries. However, HIDZs established in underdeveloped regions should take the responsibility of serving local industrial upgrading through the policy dividends they bring and effectively undertake the industrial function from large cities. Additionally, HIDZs should be established based on local characteristic industry. For example, Yangling HIDZ in Shanxi Province and the Yellow River Delta HIDZ in Shandong Province are established based on their nationally famous agriculture industries, aiming to promote innovation and demonstrate agricultural advancements. In the future, more attention should be given to the construction of HIDZs based on agriculture and service industries.

5.1.2. Improve the Planning Index System of HIDZs

After the reform of China’s spatial planning system, HIDZs have been regarded as an important functional block in cities and should be considered in the cities’ territorial spatial planning. In addition, to effectively implement spatial planning, the construction performance of HIDZs, especially their role in promoting urban innovation, should be included in the “Urban (Health) Check-up” of spatial planning. Currently, the Chinese government has established a preliminary evaluation system for HIDZs and launched evaluation of HIDZs. In order to better guide and monitor the development of national HIDZs, the Ministry of Science and Technology has revised and improved the evaluation index system five times, in 1993, 1999, 2004, 2008, and 2013. In the latest revision released in 2021, a “bonus coefficient” for east, middle and west regions, based on their development differences, has been added in the indicator system to make the evaluation results more consistent with the actual situation. For example, for some innovation indicators, the basic score in the middle and northeast is multiplied by 1.05 and the basic score in the west is multiplied by 1.1 to compared with that in the east.

However, the current evaluation system is mainly composed of indicators reflecting the development of HIDZs themselves, such as the number of R&D institutions and registered enterprises. There is a lack of indicators used to describe the impact of HIDZs on their host cities. HIDZs aren’t supposed to be created as development enclaves; instead, they are obliged to serve and lead the overall development of the region. Therefore, more attention should be paid to the innovation radiation ability of national HIDZs relative to their host cities. In the future, it will be necessary to further improve the indicator system established during the preparation of spatial planning, incorporating indicators to reflect HIDZs’ impact on urban innovation and their regional radiation function into the pre-planning prediction and post-planning monitoring indicator system.

5.1.3. Promote the Spatial Integration of HIDZs with Other Urban Space

In the context of simultaneously promoting the establishment of HIDZs and urbanization, HIDZs’ integrated development with their host cities has become very important in cities’ planning and construction. Currently, the spatial layout of national HIDZs in various cities is more and more scattered, forming a “one zone and multiple sub-parks” spatial pattern. For example, Zhongguancun HIDZ has 16 sub-parks in Beijing, and Zhangjiang HIDZ has 22 sub-parks in Shanghai. The 14th Five-Year Plan of the Ministry of Science and Technology in China also requires national HIDZs around the country to implement a “one zone with multiple sub-parks” spatial pattern, at the same time, unified planning and management must be achieved by host city. In this context, the planning and management ideas of the HIDZ should also be adjusted.

Firstly, the “one zone with multiple sub-parks” development of HIDZs is the spatial means to achieve their spillover role on urban innovation, so HIDZs’ integrated development with the urban area is an inevitable trend. Therefore, the core-park and sub-park of a certain HIDZ are not enclaves of the host city, and their planning should be considered simultaneously in the new round of territorial spatial planning of the city. Secondly, it is also necessary to coordinate the spatial planning and innovative development strategies of each city under the framework of regional coordinated development, such as urban agglomeration spatial planning. This will allow HIDZs to be integrated into the regional innovation network as important innovation platforms, and achieve new breakthroughs in innovation governance. Moreover, since in-house research and development (R&D) efforts, rather than imported technologies, are the primary sources of industrial innovation in China [47], HIDZs in China should pay more attention to the improvement of planning and management, and, in the future, shift the focus from economic development and infrastructure construction to innovation operation and governance. Only in this way can HIDZ policies be fully utilized to promote the agglomeration of small and medium-sized innovative enterprises and the strengthening of cooperation in regional innovation systems.

5.2. Conclusions

Based on the panel data of Chinese cities from 2001 to 2019, PSM-DID model was employed to investigate HIDZs’ effect on promoting the innovation output and quality in their host cities. The analysis’ results confirmed two research hypothesises, which are: (1) the establishment of HIDZs and the implementation of relevant policies can promote urban innovation, and the direct impact on the innovation output is more prominent than innovation quality; and (2) the impact on urban innovation output and quality are significantly different when HIDZs are set up in different types of cities. When an HIDZ is set up in cities with better development foundation and more diversified industrial policies, its marginal effectiveness is mainly reflected in improving the quality of urban innovation, while in cities with lower development level and less industrial policies, the marginal effect of establishing an HIDZ is mainly reflected in increasing the output of urban innovations and the HIDZ can easily become a tool to stimulate GDP growth. Drawing on the insights gained from the above analysis, we provide a brief discussion of the planning policies of HIDZs and their cities within the context of recent spatial planning practice in China. The paper proposes policy inspiration in three areas: optimizing the spatial layout of HIDZ, enhancing the planning index system, and promoting spatial integration. The aim is to provide guidance for urban decision-makers and planners in their efforts to plan and construct HIDZs in a more sustainable and effective manner.

The value of this study lies in its comparison of the impact of HIDZ policies on both the output and quality of urban innovation, building upon previous studies confirming the positive impact of HIDZs on urban economic development and innovation. Additionally, the study measures the impact of HIDZ policies in different types of cities, especially where there is an ETDZ in the city, which may affect the performance of the HIDZ. Through empirical analysis, the study provides insights into the spatial planning strategy for HIDZs and their integration with urban development, which is a valuable contribution to the rationalization of HIDZ policies and urban development under China’s planning system reform. However, the policy objectives of various development zones differ significantly, and, as such, this study did not undertake a comparative analysis of different types of development zones. Additionally, given the variations in the operational mechanisms of HIDZ in different cities, the internal interaction mechanisms between the HIDZ and the host city may also exhibit variations. Future research can extend the findings of this study in two ways: Firstly, it is possible to undertake a more comprehensive exploration of the effectiveness and disparities among different development zones in urban development. This entails analysing the macro and micro policy objectives of development zones, since different development zones and cities possess distinct development positioning and construction conditions, notwithstanding similar policies. Secondly, a more in-depth approach can be employed to analyse the mechanisms of HIDZs in fostering urban innovation. A case study of an HIDZ with unique functions would be necessary to further refine pertinent HIDZ and urban spatial planning strategies.