Does broadband infrastructure promote urban innovation? Evidence from “Broadband China” demonstration policy

Abstract

Broadband infrastructure plays a key role in supporting innovation. This paper takes the “Broadband China” demonstration policy as a quasi-natural experiment, adopts the data of 284 cities and multi-phase Difference-in-Differences (DID) approach to explore the impact of broadband infrastructure on urban innovation. We find that broadband infrastructure significantly boosts urban innovation, the increase of internet penetration rate and the development of information technology industry are the two influence channels. Heterogeneity tests show that the boosting effect of broadband infrastructure on innovation are stronger in eastern cities, large cities, key cities and cities with better educational resources. We also find that broadband infrastructure plays a stronger role in promoting radical innovation than incremental innovation, and the “Broadband China” demonstration policy produces a positive spillover effect on nearby cities' innovation.