Industrial innovation and consumption upgrading: an empirical study based on the perspective of supply-side structural reform

Mar. 10,2021
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In the new era, the Chinese economy has maintained the momentum of steady growth. However, it has also exposed the structural problems that are characterized by the coexistence of overcapacity and supply gap. Whether or not the enterprises can achieve the continuous improvement of production technology (method), the enhancement of product quality, and the effective filling of the supply gap to promote the consumption upgrade through industrial innovation is the key to achieve high-quality development in China in the new era. Based on Ngai and Pissarides (2007), this paper introduces the independent innovation effect and technology absorption effect of different industrial sectors, describes the mechanisms that affect the consumption structure and total consumption growth of a country, and further examines the possible influence of improvement of labor allocation efficiency on total consumption growth. This paper proves that enhancing the innovation effect of high-tech industries is the key factor in promoting total consumption growth and improving consumption structure. If the innovation capability and technology absorption capability remain unchanged, the growth rate of total consumption will not be affected no matter whether there is an improvement in labor allocation among different production sectors. Industrial innovation promotes the upgrading of consumption structure through the mediating effect of output structure upgrading. This paper has the following profound policy implications. As China’s economy enters a new era, the economic growth brought about by the efficiency improvement in factor allocation will quickly decrease without the further support of industrial innovation. Only by resolutely implementing the supply-side structural reforms that include industrial (enterprise) innovation and realizing consumption upgrading, can we truly achieve high-quality development.

Corresponding Author: SUN Zao
CNKI Press Officer: LI Jingjing YANG Na

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