| Summary: | High-tech industry has a powerful impact on developing countries' regional economy development. The diffusion effect of high-tech industry as the main driving force of economic development on some developed regions has been examined. However, in developing countries, especially, in China, the literature is less focused. Besides, the mechanism of factor flow is still unclear in China. We use the panel data of high-tech industries in 28 provinces of China from 2004 to 2016. This article analyzes the mechanism of industrial diffusion and factor mobility on the coordinated development of the regional economy by establishing the system GMM model and threshold model empirically. The system GMM results show that under the conditions of controlling R&D capital investment, deposit and loan balance, property rights structure, etc., capital flow can promote the coordinated development of regional economy, industrial diffusion, labor mobility and technology flow inhibit the coordinated development of regional economy; threshold regression results show The factor flow has a double threshold effect based on industrial diffusion for the coordinated development of regional economy. This study integrates the factor flow of knowledge into high-tech industry development, examining the impacts of industrial diffusion effect. The findings offer an industry developing frame to explain regional economy growth, which is beneficial to the local government's economic decisions.
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