Innovation Effect and Regional Difference of Related Variety: An Empirical Study Based on Prefecture-level City Data of China

Growth driven by innovation is of great importance to help China become a long-term economic force and gain international competitive advantage. Based on evolutionary economic geography theory, this study estimated the related variety and unrelated variety by using four-digit code classified industrial data; it analysed their spatial–temporal evolution and influence on China’s regional innovation levels using prefecture-level city data from 1998 to 2013. Results showed that average levels of related variety increased whereas unrelated variety declined. Regions with high related variety spread from the east coastal region to the central region of China, and regions with high unrelated variety moved from the northeast and north regions to the central region. Related variety promoted innovation by knowledge spillover and produced regional spillover and agglomeration effects among regions with similar levels of economic development. Conversely, unrelated variety hindered the growth of innovation and had no regional spillover among different regions. Technological innovation was the transmission mechanism of growth from related variety to economic development. Thus, it is necessary to strengthen the agglomeration effects of industries with related variety and improve each region’s innovation capacity.