Digital industrial agglomeration and breakthrough technological innovation: Evidence from business registration data

Promoting breakthrough technological innovation (BTInnovation) through digital industrial agglomeration (DIAgg) is a crucial component of achieving technological self-reliance and constructing a modern industrial system. Existing studies have focused on the impact of agglomeration on innovation, yet there is a lack of discussion regarding the effect of DIAgg on BTInnovation. Based on county-level panel data from 2003 to 2021, this study employs business registration data to measure the development level of DIAgg and analyzes its impact on BTInnovation. The findings reveal that DIAgg significantly enhances BTInnovation, a conclusion that remains robust under several robustness checks. The primary mechanisms driving the main effect are the labor pool and the technological spillover effect. Heterogeneity analysis reveals a stronger main effect in counties with superior market potential, a better business environment, greater attention to digital technology, lower intra-county competition and a specialized agglomeration model. Further analysis demonstrates that the promotional effect of DIAgg on BTInnovation in China primarily stems from specialized agglomeration. There findings contribute to the theoretical understanding of how industrial agglomeration affects innovation in the digital era and offer valuable implications for developing countries seeking to advance DIAgg and achieve high-quality development.