Multi-Perspective Research on the Mechanism of Venture Capital in Driving Innovation Development

This study empirically examines the impact and mechanisms of venture capital on innovation-driven development using a Panel Vector Autoregressive (PVAR) model with three proxy variables: total factor productivity (TFP), industrial upgrading, and technological progress. The findings demonstrate that venture capital significantly promotes innovation-driven economic development overall. Specifically, while the scale of venture capital investment shows a significant positive correlation with industrial upgrading, it fails to significantly enhance either TFP growth or technological advancement. In contrast, increasing the proportion of venture capital in aggregate social financing significantly drives technological progress. These results suggest that to fully realize high-quality, innovation-driven development through venture capital, policymakers must simultaneously expand the scale of venture capital investment and restructure regional financing systems by increasing the share of direct financing. Based on these conclusions, the study proposes policy recommendations including reforming the social financing structure, improving the multi-tier capital market system, and optimizing exit mechanisms for venture capital funds.