Spatial difference-in-differences analysis of smart city pilot policy and industrial pollution reduction: the mediating role of S&T fiscal expenditure.

Abstract

Smart city has become one of the most important tool to achieve digital transformation and intelligent development. However, the impacts of smart city pilots (SCP) on different industrial pollution have yet to be tested, and the mechanisms of SCP affect industrial pollution could be richer. In this paper, we construct a spatial difference-in-difference model for 2004-2019 by mapping SCP policy to Chinese city data to systematically quantify the impact and its potential mechanisms of digital transformation on industrial pollution. Our results show that the SCP policy achieves industrial pollution reduction targets, on average, wastewater and SO2 emissions decreased by 6.4% and 6.5%, respectively. Cities with SCP policy have more industrial pollution compared to cities without SCP policy, implying a beggar-thy-neighbor effect of SCP policy. Furthermore, significant regional disparities come to light; SCP policy in the Pearl River Delta exceeds other regions such as the Yangtze River Delta and Jing-Jin-Ji city cluster in terms of realizing the impact of industrial pollution reduction. Importantly, mechanism analysis indicated that the SCP reduced industrial pollution was partially mediated by government S&T fiscal expenditure.