Abstract: The high-quality development of industry in the new round of technological revolution and industrial transformation is not only dependent on R&D spillovers in the backdrop of dual circulation, but also largely influenced by the rise of the global value chain. This paper constructs a 2×2×3 open economy model which has two spillovers, two sectors and three elements, and uses China’s industrial dynamic panel data from 2000 to 2019 to estimate the effect of R&D spillovers on industrial total factor productivity in the backdrop of dual cycle. After controlling the effect of variables such as R&D efficiency and so on, it is found that with the high-quality transformation of innovation, the ownership advantage of international R&D spillovers leads to “market grabbing”, which increases the cost of global value chain upgrading, weakens the spatial correlation of knowledge products in adjacent spatial clusters, and has an insignificant improvement effect on industrial total factor productivity. The global value chain upgrading contributes to the sustained release of international R&D spillovers, strengthens the effective absorption of domestic R&D spillovers to a certain extent, enhances the internal and external correlation advantages of R&D spillovers, and has a significant positive effect on the improvement of industrial total factor productivity. The above conclusions have profound policy implications: in order to improve the high-quality development capability of industry, it is required not only to further resolve the institutional barriers of domestic and international R&D spillovers, but more importantly, to build a new development pattern of spatial synergy and linkage between domestic and international R&D spillovers, and enhance the spatial leading role of domestic and international R&D spillovers on industrial total factor productivity in the global value chain upgrading.

Key words: domestic R&D spillovers, international R&D spillovers, global value chain upgrading, industrial total factor productivity