Linking Manufacturing Smart Transformation to Regional Economic Development in China: The Crucial Mediation of Regional Innovation Capacity

The manufacturing industry serves as critical carrier for the empowerment of digital technologies and is the cornerstone of digital innovation and development. Smart transformation (ST), propelled by technological advancements, has become a prominent area of academic research, but its role in fostering the co-development of manufacturing industries has been overlooked. This study employs an empirical approach to examine the causal mechanisms linking ST with regional economic development (RED), particularly emphasizing the mediating effects exerted by regional innovation capacity (RIC). Leveraging panel data from 29 Chinese provinces spanning the period from 2009 to 2023, we constructed an econometric model for analysis. The findings reveal that ST has a direct effect on RED, knowledge innovation capacity (KIC), and innovation infrastructure (II) partially mediated, while technology innovation capacity (TIC) completely mediated the relationship. Theoretical contributions manifest in three dimensions: First, drawing on the sociotechnical system theory and technology diffusion theory, this paper establishes a multidimensional framework of ST, deepening the theoretical underpinnings of smart technology application in the manufacturing industry from three aspects: smart base input, smart applications, and smart market benefits. Second, it extends regional innovation theory and endogenous growth theory by conceptualizing RIC in three sub-capabilities (KIC, TIC, and II). Third, it contributes to the RED literature by exploring the coupling effect between manufacturing industry clusters and the development of RIC and ultimately concludes with targeted policy recommendations for optimizing ST strategies to foster RED in different manufacturing industries.