The flow of industrial lifeblood: The impact of the West-to-East oil transportation project on enterprise performance of China

Abstract

Based on the West-to-East oil transmission (WEOT) project, this paper uses the time-varying difference-in-differences method to empirically explore the impact of trans-regional oil and energy transmission strategy on the production performance of enterprises. The results reveal that the WEOT project significantly improves the production performance of enterprises along the route and enhances the production performance of other enterprises in neighboring cities as well as those in the same province. From the heterogeneity perspective, the WEOT project primarily improves private enterprises, enterprises in low-energy-dependent cities, non-labor-intensive enterprises, and enterprises in non-centrally supported industries. The results of the mechanism analysis show that the oil supply strategy primarily improves firms' production performance by improving enterprise productivity and promoting enterprise agglomeration. The research findings help to clarify the mechanism of interaction between energy supply and enterprise production performance, and provide empirical support for developing countries to navigate potential risks of energy supply shortage.