Policy for whom? The heterogeneous effects of innovation policy on urban economy

Assessing the heterogeneity of urban innovation policies offers key insights into limited resources allocation and urban policy implications. This knowledge can enhance the effectiveness and rationality of urban policy-making and maximize economic benefits. By utilizing panel data from 280 Chinese cities (2003-2016), this study explores the impact of city-level innovation policies on economic performance through difference-in-difference analysis. It reveals that the Innovative City Pilot Policy (ICPP) positively influences urban economies for at least three years. Notably, significant spillover effects are observed within a 50 to 100 km radius of pilot cities, diminishing beyond 150 km. Meanwhile, the siphonic effects of pilot cities on the surrounding cities are not pronounced. The study identifies technological innovation and institutional innovation as key mechanisms driving economic growth through ICPP, though institutional innovation's effects require strengthening. Furthermore, while the city's administrative level has a minimal impact, cities with populations between 1 and 5 million exhibit the most substantial economic benefits. Additionally, innovation policies aligned with provinciallevel frameworks yield more robust effects in double-pilot cities compared to their single or multiple pilot counterparts.