The Unintended Consequences of Urban Community Infrastructure Investment for Consumption in China

Abstract

Background: At a critical stage of the shift of economic growth, this work studied urban community infrastructure’s driving role in consumption, discusses the causes and action mechanisms of infrastructure in promoting residents’ consumption. Methods: Based on micro-household survey data, applying probit regression. Result: We found that community infrastructure, divided according to either its engineering or its service nature, has a great positive externality, significantly increasing the proportion of residents’ consumption, and that the driving force behind consumption in urban central areas, transportation, and environmental protection infrastructure is more obvious. Good urban community infrastructure facilitates residents’ production and promotes the efficient circulation of information, resources, and factors; improves residents’ subjective expectations; and brings more consumption opportunities so that community infrastructure significantly improves residents’ probability of consumption. Conclusion: In the context of economic transformation to a high-quality economy, we should pay attention to the key role of community infrastructure investment in structural transformation and choose urban central areas, capital-intensive industries, and transportation and environmental protection infrastructure as the investment focus so as to improve the consumption returns brought by infrastructure and achieve the transformation of the economy from an investment-driven one to an innovation-driven one.