Research On The Impact Of China-East Asia Financial Cooperation On Innovation Capacity Of Countries In The Region

The Fed’s repeated interest rate hikes and interest rate cuts have had a huge detrimental impact on the economies of East Asian countries.But the signing and entry into force of the RCEP has brought many new opportunities and possibilities to East Asian countries.Thus confronting both crisis and opportunities,financial cooperation has become an important driving force for economic recovery and growth in East Asia.China plays a pivotal role in regional financial cooperation in East Asia,and China’s Belt and Road Initiative has become an important arrangement affecting financial cooperation between China and other East Asian countries(hereinafter referred to as China-East Asia Financial Cooperation).For instance,financial cooperation between China and ASEAN countries was initiated in 1992.In recent years,due to the RCEP and the Belt and Road Initiative,financial cooperation between China and ASEAN has continued to expand and deepen.Besides,due to geographical location,Japan,South Korea and China have close cooperation.And the signing of the RCEP and the detente between China,Japan and the South Korea have also promoted the further deepening of financial cooperation between China and Japan,South Korea.In addition,the China-East Asia financial cooperation can promote the financial development of all countries in the region.Many researches show that financial development can promote regional innovation development,and innovation also plays a key role in productivity growth and economic progress in East Asia.Therefore,it is of great significance to explore the impact of China-East Asia financial cooperation on the regional innovation capability.And the mechanism and path of financial cooperation on the improvement of regional innovation capacity are worth exploring further.From the perspective of China,this thesis will deeply study how to strengthen and expand the China-East Asia financial cooperation,so as to promote the progress and improvement of the regional innovation capability in East Asia,and further promote the economic recovery and development of East Asia.This thesis studies the influence of China-East Asia financial cooperation on the regional innovation capability from both theoretical and empirical aspects.Firstly,in theoretical aspect,based on the relevant theories of financial cooperation and innovation,this thesis summarizes the mechanism of financial cooperation affecting the regional innovation capability,for instance,financial cooperation affects the regional innovation capability from four aspects: easing financing constraints,realizing industrial structure upgrading,realizing knowledge and technology diffusion,and optimizing the innovation environment.Then,in the empirical aspect,this thesis uses event assignment method and principal component analysis(PCA)method to construct China-East Asia financial cooperation index system and East Asian countries’ innovation capability index system,and analyzes the results of measurement data.Based on the panel data from 2000 to 2020,the bi-directional fixed effect model is used to demonstrate that the China-East Asia financial cooperation has a significant promoting effect on the enhancement of the regional innovation capability.Furthermore,the robustness test and the endogeneity test are conducted by changing the measurement methods of explanatory variables or explained variables or delaying the explanatory variables by one and two periods respectively.Heterogeneity analysis shows that the impact of China-East Asia financial cooperation on the innovation capacity of regional countries is different.Although the innovation ability of countries with different financial development levels is significantly enhanced,it has a greater impact on the innovation capacity of countries with low financial development levels.Eventually,according to the findings in theory and empirical research,this thesis brings up countermeasures and recommendations to improve regional innovation ability through East Asian financial cooperation,providing Chinese plans to strengthen the depth and broaden the scope of regional financial cooperation in East Asia.This thesis will implement differentiated financial cooperation strategies in East Asian countries to maximize the continuous promotion and improvement of financial cooperation.We should jointly fend off the economic impact of the pandemic in the past,guard against future risks and crises;seize opportunities and challenges,and promote innovation capacity and economic recovery in East Asia.