Innovation Like China: Evidence from Chinese Local Officials' Promotions

We investigate how cadre incentives within political organizations affect innovation activities in China. Analyzing prefecture-level data between 2006 and 2015, we find that prefecture-level mayors are more likely to be promoted in regions with a strong innovation performance, as indicated by the number of patents, especially in prefectures with strict innovation evaluations. We also identify inter-jurisdictional competition among local governments in the field of technological innovation, which is reflected in competition over the number of patents. We show that this competition effect holds after controlling for knowledge spillover effects. Our study highlights the important role of political incentives of government officials in promoting innovation in developing countries.