Information infrastructure construction and firm export performance in China

Abstract

This paper examines the causal relationship between information infrastructure construction and firms’ export performance. Adopting the "Broadband China" strategy as a quasi-natural experiment, we conduct a difference-in-differences estimation to demonstrate that the implementation of information infrastructure construction is a significant contributor to firms' export performance, an effect that withstands extensive robustness tests. We identify three main channels through which information infrastructure construction promotes firms' export performance: facilitating digital transformation, expanding firm production scale, and enhancing firm supply chain management capabilities. Particularly, the export response to information infrastructure construction is stronger for manufacturing firms, high-tech firms, and those firms with abundant human capital. Given significant ongoing information infrastructure investment in many emerging countries, this result provides important new information on the impacts of information infrastructure construction on exports.