SPATIAL EFFECT OF KNOWLEDGE SPILLOVER ON REGIONAL ECONOMIC DEVELOPMENT: AN EMPIRICAL STUDY FROM CHINA

Houxing Tang

School of Business Administration, Nanchang Institute of Technology, Tianxiang Road 289, Nanchang, China

In order to measure the spatial effect of knowledge spillover on regional economic development, a spatial Durbin model, which contains the dependent variable GDP and independent variables Capital, Labour &Knowledge stock, was constructed based on C-D production function. And then an empirical study with 31 provinces of mainland China from year 2000 to 2011 was conducted. The results show that, firstly, the Capital, Labour and Knowledge-stock all have significant positive correlation with GDP. In other words, these three factors have an important impact on the local regional economic development, but the effect of Capital is the greatest and the Labour & Knowledge-stock follow suit. Secondly, the Capital and Labour have a negative spillover effect, but the Knowledge-stock has much more positive effect. Consequently, the governments of developing regions should make full use of the spatial effect of knowledge spillover from developed regions to promote the economic restructuring and great-leap-forward development, especially when they are lack of sufficient funds to support local R&D activities.