Can innovation really bring economic growth? The role of social filter in China.

• The relationship between R&D input, R&D output and economic growth is divergent. • Most of positive associations are found in non-peripheral regions and non-state owned sectors. • Social filters are more effective under non-peripheral regions and non-state owned sectors. • The social filters have a key role in innovation and growth. This study explores the relationship between R&D investment and economic growth in China, using a newly collected panel data set. Specifically, we investigate how social filters are connected to R&D output. Instead of linking R&D investment directly to economic performance, we adopt a two-step strategy which identifies the impact R&D investment on R&D output, and then study the causal links between R&D output and economic development. Our results suggest that the relationship between R&D input, R&D output and economic growth diverges by different region and sectors. Most of positive associations stem from non-peripheral regions and non-state owned sectors. Social filters are also more effective under these circumstances. These results reveal the complexity of relationships between R&D efforts and economic performance and point to the important role of social filters in innovation and growth. [ABSTRACT FROM AUTHOR]