In a groundbreaking study that sheds new light on the intricate dynamics of foreign direct investment (FDI) quality and its impact on regional economic resilience, researchers have unveiled nuanced spatial and temporal patterns within China’s Yangtze River Delta (YRD) from 2009 to 2022. Their analysis leverages cutting-edge spatial econometric modeling to decode how FDI quality interacts with emerging productive forces to influence the region’s economic robustness amid fluctuating global and domestic pressures. The findings reveal complex nonlinear relationships and spatial spillover effects that challenge conventional wisdom, underscoring the critical role of innovation-driven growth and regional policy calibration in fostering durable economic ecosystems.
This research emerges against the backdrop of the YRD’s pivotal position as a strategic economic corridor and a hub of manufacturing, technology, and finance. The region’s heterogeneous development levels, marked by powerful metropolitan cores and less-advanced peripheries, present an ideal canvas to explore how foreign investment quality shapes local resilience to shocks. Through comprehensive spatiotemporal data analysis across cities such as Shanghai, Hangzhou, Ningbo, Nanjing, Suzhou, and Hefei, the authors trace the evolution of FDI quality, the rise of new quality productive forces—entities characterized by advanced innovation and productivity—and the resulting economic resilience outcomes.
Central to the study’s revelations is the identification of a U-shaped relationship between FDI quality and both new quality productive forces and economic resilience. Initially, FDI quality exerts a suppressive effect, potentially due to adaptation lags or incompatibilities between foreign technologies and local industrial structures. However, as integration deepens and absorptive capacities improve, the influence becomes positive and amplifies resilience. This insight marks a departure from simplistic linear models and calls for a reevaluation of how foreign investments are harnessed over time within regional development strategies.
The mediation role of new quality productive forces emerges as another critical mechanism. These productive forces act as transmission channels linking FDI quality to economic resilience, suggesting that innovation and productivity enhancements derived from foreign capital are instrumental in buffering economic systems against volatility. Notably, this mediation effect exhibits regional heterogeneity: in the more developed Zhejiang and Jiangsu provinces, full mediation is observed, whereas in Anhui, a less developed province, the relationship displays partial mediation and a transient inverted U-shape, reflecting local structural challenges.
Temporal disaggregation of the data further illuminates the evolving nature of these dynamics. While FDI quality appeared to dampen economic resilience during the 2009–2017 period—perhaps reflecting the global financial crisis aftermath and early-stage integration challenges—its role pivoted to a positive contributor between 2018 and 2022, coinciding with intensified innovation ecosystems and policy reforms. This temporal shift underscores the importance of adaptive governance and sustained capacity building in maximizing the benefits of foreign investment quality.
Spatial analysis uncovers nonlinear spillover effects that add layers of complexity to regional development interactions. Neighboring regions benefit from positive externalities when the local technological absorptive capacity is low, indicative of knowledge diffusion and technology transfer mechanisms. However, as technological disparities widen and marginal returns on knowledge spillovers diminish, these benefits are supplanted by siphoning effects. Enhanced factor mobility—facilitated by improved infrastructure—further exacerbates such siphoning, where core cities attract resources at the expense of peripheral areas, resulting in an inverted U-shaped impact of local FDI quality on neighboring regions’ economic resilience.
These empirical patterns challenge traditional spillover theories and demand more nuanced conceptual models that incorporate absorptive capacity thresholds, diminishing returns, and mobility-induced resource reallocation. The spatial Durbin model employed in this research permits such a sophisticated evaluation, capturing both direct and indirect effects with temporal granularity. This methodological innovation represents a significant advancement in unpacking the complex interplay among FDI, innovation, and resilience.
The observed spatial clustering of FDI quality, productive forces, and resilience across the YRD reflects entrenched regional disparities. The core metropolitan cities consistently outperform others, attributable to stronger innovation infrastructures, higher levels of human capital, and more mature industrial ecosystems. Meanwhile, secondary cities and less-developed areas show relative balance but lag on absolute growth metrics, indicating persistent challenges in achieving balanced regional development. This spatial heterogeneity calls for tailored policy interventions recognizing local contexts rather than one-size-fits-all approaches.
From a theoretical standpoint, the study extends economic geography and regional development literature by elucidating nonlinear interdependencies and mediating mechanisms underpinning resilience formation. The identified U-shaped and inverted U-shaped relationships illuminate dynamic phases of development where the effects of external investments evolve from disruptive to developmental or vice versa. This challenges static assumptions and encourages dynamic policy design that adapts to changing regional capacity and market structures.
Policy implications are profound and multifaceted. The research advocates for spatially differentiated foreign investment policies, especially emphasizing customized strategies for lagging subregions such as Anhui Province. By facilitating targeted integration of foreign capital within local value chains, these policies can address entrenched developmental gaps and foster sustainable, inclusive growth. Moreover, the centrality of new quality productive forces as mediators highlights the necessity of nurturing innovation ecosystems through enhanced collaboration among industries, academia, and research institutions.
Furthermore, the evidence points to the importance of coordinated institutional frameworks and resource allocation mechanisms. Integrated governance approaches that align institutional policies with optimized resource distribution can simultaneously drive quality economic growth and regional equity. Core cities’ radiating influence can be harnessed effectively through metropolitan area development, while proactive policy dividends can empower less-developed regions to capitalize on emerging opportunities. Enhancing regional coordination mechanisms within the YRD is vital for facilitating factor mobility and knowledge spillover while mitigating siphoning effects.
Increasing support for innovation-driven development is imperative, requiring systemic enhancements in enterprises’ independent innovation capabilities and mechanisms for technology absorption from high-quality foreign investment. Establishing collaborative innovation systems spanning industry, universities, and research institutes can sustain industrial transformation and boost resilience. Governments are urged to not only increase policy support but also build resource-sharing platforms and optimize the flow of innovation factors toward new productive forces.
Diversification of resilient economic development pathways is another strategic pillar. Refinement of industrial policies, talent development aligned with market demands, and improved education-industry integration together form the backbone of robust economic systems capable of absorbing shocks. Such approaches are critical for balancing development across the YRD and maximizing the cumulative advantage of urban agglomerations centered around powerhouse cities like Shanghai and Nanjing.
The study’s findings shape a vision for the future of regional economic governance in the YRD and beyond. Aligning policies with urban characteristics, promoting inter-city collaboration, and integrating innovation, industrial, and capital chains can leverage complementary advantages and foster resource sharing. This integrated approach promises not only to enhance economic resilience but also to elevate the global competitiveness of the region in an increasingly uncertain and interconnected world.
Importantly, this research affirms the necessity of temporal and spatial contextualization in understanding complex economic phenomena. Policymakers, scholars, and practitioners must recognize that the impact of FDI quality and innovation is neither static nor uniform but varies across places and over time. Embracing such complexity enables more effective interventions that support sustainable development trajectories aligned with local needs and capacities.
In sum, the study by Lv, Lian, and Hua offers an incisive, data-rich exploration of the multifaceted roles of foreign investment quality, innovation, and spatial diffusion in shaping economic resilience within one of China’s most dynamic regions. By integrating sophisticated spatial econometric techniques with rich longitudinal data, it establishes new conceptual and empirical benchmarks for regional economic development research. The implications resonate deeply with global debates on managing foreign capital, fostering innovation, and building resilient economic systems in the face of rapid technological change and geopolitical uncertainties.
This research not only enriches academic discourse but also provides a strategic roadmap for policymakers aiming to orchestrate balanced and quality growth in multi-polar urban regions. The interplay between local capabilities, innovation ecosystems, and investment quality revealed herein underscores the critical importance of adaptive governance and coordinated regional planning for sustainable development in the 21st century.
Subject of Research: Foreign direct investment quality, new quality productive forces, and economic resilience in the Yangtze River Delta region, analyzed via spatial and temporal dimensions with empirical spatial Durbin modeling.
Article Title: The relationship between FDI quality, new quality productivity forces, and economic resilience in China’s Yangtze River Delta region: insights from an empirical spatial Durbin model.
Article References:
Lv, H., Lian, Y. & Hua, X. The relationship between FDI quality, new quality productivity forces, and economic resilience in China’s Yangtze River Delta region: insights from an empirical spatial Durbin model. Humanit Soc Sci Commun 12, 1083 (2025). https://doi.org/10.1057/s41599-025-05436-0
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