Does high-speed railway promote urban innovation? Evidence from China

Abstract

Empirical discussion in the existing literature on the relationship between transportation infrastructure and innovation remains limited. As one of the most important transport infrastructures, China's high-speed railway (HSR) has greatly compressed the space-time distance and strengthened the linkages between cities, which may contribute to innovation activities. Using the panel data of 285 Chinese prefecture-level and above cities and employing the difference-in-differences (DID) model, this paper examines the impact of HSR opening and HSR service intensity on the urban innovation. Propensity score matching (PSM) together with DID (PSM-DID) method is utilized to address the potential estimation biases. The empirical results demonstrate that HSR has significantly improved the level of urban innovation. Heterogeneity analysis finds that the promotion effects of HSR on innovation are more remarkable in peripheral and small cities. Moreover, the effects of HSR on cities far away from the central and large cities are with higher significance and greater magnitude than cities close to central and large cities. For cities near central and large cities, the service intensity of HSR is more likely to improve their innovation level. In addition, we further find that service industries and private enterprises benefit more from the effect of HSR in promoting innovation. This study can provide robust evidence for the effect of HSR on promoting urban innovation, as well as policy enlightenment for innovation growth and sustainable economic development.