The effects and mechanisms of place-based innovation policy: Evidence from National Independent Innovation Demonstration Zones

Using panel data from Chinese prefecture-level cities covering 2003–2023, this study employs the entropy method to construct a comprehensive evaluation system for urban innovation capability. The staggered difference-in-differences method is used to systematically identify the impact of the National Independent Innovation Demonstration Zone policy on urban innovation capability. The findings reveal that demonstration zone implementation significantly promotes urban innovation capability, and this effect remains robust after a series of robustness tests. Mechanism analysis indicates that government innovation preferences and intellectual property protection are two significant channels through which the policy enhances urban innovation capability. Heterogeneity analysis demonstrates significant regional and city-type differences in policy effects, with pronounced impacts on eastern, large, and non-resource-based cities, while effects on central and western regions, small and medium-sized cities, and resource-based areas are relatively limited. Accordingly, we propose recommendations to enhance demonstration zones’ effectiveness and promote coordinated regional innovation development. These include systematically expanding demonstration zones’ coverage, improving innovation incentive mechanisms and intellectual property protection systems, and implementing strategically targeted regional policies. This study provides empirical evidence and valuable policy insights for optimizing place-based innovation policies.