China Railway High-Speed: The Impact of Transportation Infrastructure on Corporate Innovation
Posted: 18 Apr 2018
Date Written: April 1, 2018
This study examines the impact of transportation infrastructure on corporate innovation. This topic is important because transportation infrastructure represents one of the major types of government spending and innovation is crucial for economic growth at both firm- and national levels. To shed light on this important topic, we exploit the introduction of high-speed rail services (HSR) in China from 2007 to 2013 as exogenous shocks that improved the transportation infrastructure of smaller cities with unplanned access to HSR. Using a difference-in-differences approach, we show that, relative to control firms without access to HSR, treated firms located in cities with unplanned access to HSR exhibit increased level of innovation output as captured by increased number of patents applied and granted. We identify two possible channels through which transportation infrastructure enhances innovation: increased technical knowledge spillover and improved attractiveness to talents.
Keywords: transportation infrastructure, innovation, high-speed rail, knowledge spillover
JEL Classification: H5, O3, R4
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