Abstract: Innovation driven development is the key and foundation to support China's industries to move towards the mid to high level and achieve high-quality economic development. Based on a quasi-natural experiment of national innovative province construction, this paper adopts the provincial panel data from 2001 to 2019 to examine the impact of fiscal vertical imbalance on the effectiveness of the innovation-driven policy from the perspective of both innovation quantity and innovation quality. The findings show that there are both innovation quantity effect and innovation quality effect in the construction of national innovative provinces, and that fiscal vertical imbalance will significantly inhibit the innovation quality effect, but does not affect its innovation quantity effect. From the perspective of innovation input, it is found that the construction of national innovative provinces has a positive impact on innovation human capital input and innovation fund input, but fiscal vertical imbalance inhibits the positive role of national innovative province construction, which leads to the difference in the impact of fiscal vertical imbalance on the effectiveness of innovation-driven policy between innovation quantity and innovation quality. Therefore, in order to enhance the effectiveness of innovation-driven policies, China should further improve the fiscal and taxation systems, moderately reduce fiscal vertical imbalance, optimize local fiscal expenditure structure, guarantee fiscal science and technology investments, summarize the experiences of national innovative province construction, and further promote the national innovative province construction.

Key words: fiscal vertical imbalance, innovation driven policy, national innovative province construction, innovation quantity, innovation quality