This paper studies the interlinks between innovation inputs and outputs and between innovation outputs and economic development. Using a panel data-set from 31 regions of China, we show that the difference in regional innovation output can be significantly explained by R&D manpower and expenditure, highly educated students, and public education spending, while GDP is linked to patent, high-tech export share, and new product sales. Our findings provide support for the use of government R&D subsidies and education rebate.

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