The power of knowledge: basic research and technological innovation–evidence from within and across industries in China

The role of basic research for technological innovation is becoming increasingly prominent along with the shift in demand characteristics of the new development stage of China’s industrial sector. We verified the relationship between basic research and technological innovation using data from China’s industrial sector for the period 2001–2020. Research has found that industry-based research can contribute to higher levels of technological innovation, and that this impact occurs not only within industries but also between industries. The results of the mechanism test indicate that technological opportunities are an important mechanism for the innovation effect of basic research in the industry and that the intra-industry innovation effect of basic research is achieved mainly through increased specialization in the industry. It is further found that the higher the technological level of the industry, the better the technological and policy environment, and the more mature and maturing the industry is, the more significant the innovation effect of basic research in the industry.