This study conducts a quasi-natural experiment to analyze the impact of China's Free Trade Zone (FTZ) policy on firms' innovation performance. Using patent data for listed companies from 2012 to 2020, a time-varying difference-in-differences model is applied. Robustness checks, including parallel trend and placebo tests, are employed. The mediating roles of financing constraints and industrial agglomeration are analyzed, along with moderating effects of contextual factors and firm heterogeneity. Results show that the FTZ policy significantly enhanced firms' innovation performance by alleviating financing constraints and boosting industrial agglomeration, with effects influenced by economic development levels and government involvement.

Xin Su, Shengwen Wang