Abstract: Industry co-agglomeration is the source of regional innovation. At the same time it will transmit the China′s economic development path from factor-driven to innovation-driven. As the regional economic integration level in China has gradually increased, the spatial externalities of regional innovation have gradually emerged from co-agglomeration.The study found that the co-agglomeration of producer services and manufacturing contribute to regional innovation. However, the impact on neighboring regions innovation is “first suppressed and later increased”. The co-aggregation of supportive producer services-manufacturing will enhance the native region and neighboring region innovation level.The space spillover effects gradually decays as the distance increases. The co-aggregation of basic producer service and manufacturing has no significant effect on the innovation of native region, but it will have a “siphon effect” on neighboring regions. The co-agglomeration spatial effect of different producer services on regional innovation will be different. When the space distance reaches 750km, there is a positive spillover effects. Therefore, industrial co-agglomeration is a realistic demand for regional innovation. The development of the region not only needs differentiation and refinement of management, but also needs to improve the regional infrastructure and information transfer rate, to promote inter-industry diversification and collaboration.

Key words: co-agglomeration, regional innovation, spillover effect