Smart city construction empowers tourism: mechanism analysis and spatial spillover effects

Abstract

It has been more than ten years since China’s smart city was designated. However, no studies have given rigorous empirical evidence on the development of tourism under the construction of smart cities. Based on the panel data of 297 cities from 2000 to 2021, this paper uses three batches of smart city designations in China as quasi-natural experiments and constructs a time-varying difference-in-difference (DID) model to empirically test the tourism economic effects of smart city construction. It is found that smart city designation significantly increases urban tourism revenue by 24.3% and tourist arrivals by 17.2%. After the parallel trend test, the results of the dynamic DID model reveal the increasing tourism economic effect as the smart city construction progresses. Moreover, the potential Selection Bias and the specificity of the four municipalities in the model are taken into account, and false designated cities are randomly generated as placebos. A series of robustness tests enhance the credibility of the findings. Combined with the availability of data, this study verifies four main impact mechanisms, including attracting tourism investment, stimulating tourism entrepreneurial activities, improving tourism operational efficiency, and attracting relevant talents to work in tourism. Considering that the growth of smart economy may break the spatial barrier, we combine the spatial Durbin model with the DID model. The results based on the three spatial weight matrices all support the existence of spatial spillover tourism economic effects of the smart city construction. This study has implications for other countries with plans to upgrade urban construction patterns and transform traditional tourism.