Abstract:From the perspective of factor mobility, this paper builds an environment-driven model for the transformation and upgrading of China"s manufacturing industry. According to 30 provincial balanced panel data from 2014 to 2019, the paper analyzes the driving effects of industrial environment and factor mobility. The results show that: (1) industrial environment optimization can significantly promote the transformation and upgrading of manufacturing industry. The driving effect of industrial structure upgrading is the highest; Industrial attraction, carbon value control and government innovation incentive are lower. However, the rising of labor cost and environmental regulation make a restraining effect. Moreover, government policy regulation performs a decomposition driving effect on manufacturing innovation transformation. (2) Factor mobility can significantly affect the transformation and upgrading of manufacturing industry, and partly play a role of the mediating effect. The direct driving effect of factor inflow shows a decreasing trend of ‘technology > capital > labor’, and the intermediary driving ability shows a decreasing trend of ‘capital > technology > labor’, and the mid and high range factor mobility evolves as the core element of the driving mechanism. At the end of this paper, some suggestions are put forward to optimize the industrial environment and promote the mobility of factors.