How Does the Smart City Policy Influence Digital Infrastructure? Spatial Evidence from China

Abstract

With the rapid development of the Internet and digital technology, digital infrastructure has become an important part of urban infrastructure. Many cities are enacting smart policies to promote the development of digital technology infrastructure. However, what are their mechanisms? There is currently a shortage of literature on the subject. This paper tried to solve this problem and used China as an example. Using panel data from cities in China, this paper used the spatial multiple-period difference-in-difference (SDID) method to investigate the impact of smart city policy (SCP) on digital infrastructure. First, we found that SCP significantly promotes the construction of digital infrastructure, with strong positive spatial spillover effects. This result remained valid after a series of rigorous robustness tests. Second, we discovered that the indirect effects of policy implementation outweigh the direct effects. Furthermore, smart city development enhances local government investment in digital infrastructure, attracts more high-tech enterprises, and consequently drives improvements in urban digital infrastructure levels. Lastly, we observed that the effectiveness of smart city policies is stronger in cities with good fiscal conditions, strong economic development, and a thriving digital economy. This research will not only enrich research on smart cities but also provide policy recommendations for strengthening digital infrastructure.