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| Does Traffic Infrastructure Promote Innovation？A Quasi-natural Experiment Based on the Expansion of the High-Speed Railway Network in China |
| ZHU Zhujun, HUANG Xianhai, WANG Huang
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School of Economics, Zhejiang Gongshang University;
School of Economics, Zhejiang University |
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Abstract The construction of transportation infrastructure is a leading factor in economic development. In the last 10 years, China has made considerable progress in developing the infrastructure for its high-speed railway, which is now the world‘s largest and fastest rail network. The network characteristics of transport infrastructure can improve spatial accessibility by reducing the transportation costs. Transport infrastructure can also increase the free flow of innovation and lead to innovation spillover across regions (Krugman, 1991). In general, if transportation infrastructure leads to a one-way flow of innovation factors, it can be seen to have had an agglomeration effect on regional innovation and a negative spillover effect in terms of space. If it leads to the two-way flow of innovation factors, it can be seen to have had an innovation diffusion effect and a positive spillover effect in terms of space (Cantos et al., 2005). Although the literature has mostly focused on the macro-economic effects of high-speed rail, a few studies have focused on high-speed rail from the perspective of heterogeneous firm theory and analyzed the mechanism of the innovation incentives for firms. The extension of the high-speed rail network has improved the accessibility of the major cities in China, and had innovation “spillover effects” on the cities along the lines. In addition, the extension of the high-speed railway has strengthened the foundations for innovation in the central cities through economic agglomeration, and thus had a “siphon effect” in transferring high-end economic factors from the cities along the line to the central cities.
In this paper, we use the firms in cities that joined the high-speed rail network in 2008-2012 as our research object for conducting quasi-natural experiments to determine the effects of high-speed rail on the innovative performance of firms along the lines. First, our results show that in general, the number of patent applications and the average annual patent citations of the treatment firms are significantly higher than those of the control group of firms without access to high-speed rail. Specifically, there is a significant positive effect on the number of patent applications for inventions, utility models, and designs, with the increase in the number of patent applications for utility models being greater than that for the others. Second, gaining access to high-speed rail has a dynamic effect on firm innovation, showing positive innovation effects within one to three years. Notably, the amount of patent applications reaches a local peak after one year, and the average patent citations reach a local peak after three years. Third, the distance from the innovation center has a partial “U”-shaped relationship with the effect on innovation, such that the positive effect is greater for cities within 100 km of a railway line than those 200-300 km away from a line. Fourth, our analysis of the intermediary mechanism shows that firm-level variables such as the degree of competition, entry and exit, change in profit, and change in human capital, and city-industry level variables such as the industry concentration, transportation volume, investment volume, and market potential can explain the changes in firms' innovation behavior. Fifth, in cities closer to the technological frontier, the more competitive industries can achieve greater positive innovation.
This paper makes the following contributions. (1) The literature has mainly explored the effects of transport infrastructure at the macro level, and we thus lack information on the micro-level effects of transport infrastructure on firm behavior. Our findings address this gap by revealing the micro-mechanism of the impact of high-speed rail on firm innovation in cities on the network. (2) Existing studies on the micro effects of transport have potential endogeneity issues (Li and Tang, 2015; Zhang et al., 2018). In this paper, these endogeneity issues are resolved by using the high-speed railway network as a quasi-natural experiment. (3) We provide empirical evidence of the positive impact of transport infrastructure on economic growth. Specifically, we show that infrastructure construction, including high-speed rail, can achieve the dual goals of upgrading the innovation “hardware” and “software.”
Our findings have a number of policy implications. First, the government should accelerate the supply side of the structural reform of transport infrastructure to improve the level of economic development. In this regard, a possible implementation path would be to increase the supply of high-quality infrastructure and the construction of transportation infrastructure, especially in relatively backward areas. Second, the government should accelerate the development of an innovative economy and focus on the factors that drive innovation in the central cities. Improving the quality of the railway infrastructure in underdeveloped cities can also help narrow the development gap between different regions. Third, the government should accelerate the transformation of the modes of innovation, and seek to improve the quality and the level of application of innovation. Rather than directly stipulating the number and speed of patent applications, the government should pay more attention to the dynamic monitoring of the quality of innovation and the level of application. Overall, enhancing the effectiveness of the industrial policies will promote innovation and economic development.
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Received: 25 December 2018
Published: 29 November 2019
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