Abstract: The crowding out of innovation is a major obstacle to implementing the innovation driven strategy. From the perspective of effective demand shortage of enterprises' innovation, the paper analyzes the crowding out effect of innovation from resource dependency. In the formation of resource dependency, the resource enterprises lack driving force and ability due to limitation of product homogeneity and high resource revenue; the manufacturing enterprises appear recession in the flow of factors and have driving force without ability. Then the effective demand shortage of enterprises' innovation leads to the crowding out of innovation. The empirical result shows that the crowding out of large and medium-sized enterprises' innovation from resource dependency exists in China; and there are several problems of enterprises' innovation in China's resource-based regions, such as inefficiency, decreasing returns to scale and low contribution of labor input. Finally, the paper suggests strengthening the driving force and ability of enterprises, promoting the effective demand of innovation, and realizing endogenous innovation.

Key words: resource dependency, effective demand, scientific and technological innovation, crowding out effect