Economic Resource Spatial Spillover and Local Government Policy Innovation Adoption in China

ABSTRACT To examine whether economic resources in neighboring municipalities affect policy innovation adoption, this study investigated work resumption and production policies implemented by 290 Chinese municipalities. Word Mover's Distance was employed to measure policy innovation adoption, and spatial econometric models were used to analyze spatial spillover effects. The results reveal distinct spillover effects across different regional contexts. Specifically, we found negative spillovers from policy innovation adoption in eastern regions but positive spillovers in non‐eastern region. Additionally, in eastern areas there are spatial negative spillovers from foreign direct investment (FDI) on policy innovations and positive spillovers from economic development. Furthermore, in non‐eastern regions, fiscal decentralization has spatially positive spillovers on policy innovation, but FDI and economic development have negative spillovers. These findings suggest that regionally tailored strategies are essential to address asymmetric spillover effects and promote more balanced and effective policy innovation across different development contexts.