Did high-speed rail affect the entry of automobile industry start-ups? Empirical evidence from Guangdong Province, China

Abstract

The arrival of high-speed rail (HSR) leads to unprecedented time-space effects, potentially assisting human interactions and benefitting service industries and knowledge-intensive industries, but its impact on the manufacturing industry is unclear. To fill in this gap, this paper focuses on the relationship between HSR and the automobile industry start-ups from the perspective of entrepreneurship rather than comparative advantage. Using all cities in Guangdong Province as a sample and the difference-in-differences (DID) model, this paper provides a quantitative assessment of the entry of automobile industry start-ups in cities served by HSR. The following conclusions are drawn. First, HSR has a destructive, re-connection effect for the automobile industry within a self-contained entity, stimulating the entry of start-ups in cities with HSR in different degrees. Second, on the whole, the empirical results suggest a positive impact of HSR on the entry of the automobile industry start-ups, reflected in a 26% net increase in the number of newly registered automobile industry companies for a city. Third, the multi-stage DID results suggest that the impact of HSR on the entry of the automobile industry start-ups might have time-lagged effects; HSR has significantly contributed to the entry of automobile industry start-ups in the fourth, fifth, and sixth years after it first started running. These findings highlight that, although HSR plays a vital role in the knowledge economy, other industries that are not strictly sensitive to knowledge can also achieve industrial upgrading through the opportunities brought by HSR.