Creating path breakthroughs with skill endowment and complementarity: evidence from the regional industrial evolution of China, 2000–2015

This study explores how skill endowments and complementarity influence industrial development trajectories, particularly those leading to path-breaking economic activities. By drawing on the multidimensional cross-relatedness approach of evolutionary economic geography (EEG), industry-occupation cross-relatedness networks were constructed for 264 Chinese prefecture-level cities on the basis of Chinese industry and occupation data, and subsequently these were analysed to examine their interactions. Empirical evidence suggests that regions are inclined to develop new industries closely associated with skill structure. More importantly, regions with high-skilled labour agglomeration and high-low skilled labour co-agglomeration have a stronger ability to develop new industries less related to their existing industrial structures and achieve path breakthroughs. The effects of skill endowment and complementarity vary across different regions and industries. Specifically, the impact of high-low skilled labour agglomeration on industrial path breakthroughs is more pronounced in eastern China. Moreover, in regions with greater economic complexity, industrial path breakthroughs are more closely associated with skill complementarity. Labour-intensive industrial diversification exhibits the strongest relationship with skill structure, whereas the regional path dependence effect is more pronounced in areas with higher industrial complexity.