The Impact of New infrastructure Construction on Optimization and Upgrading of Industrial Structure

Abstract

Industrial optimization is needed as China’s economy moves toward high-quality growth. The construction of new infrastructure, driven by new development concepts and patterns, facilitates industrial optimization. This study aims to explore the impact and mechanisms of new infrastructure construction on industrial structure optimization. The index of industrial structure upgrading and the pace of industrial transformation were calculated using panel data from 266 prefecture-level cities, which spanned from 2011 to 2018. This study uses two-way fixed effects and mediation effect methodologies to experimentally investigate the impact of new infrastructure construction on the optimization of industrial structure, while also considering possible endogeneity concerns. We found that new infrastructure building promotes industrial transformation and urban industrial structure upgrading. These results pass robustness and endogeneity testing. However, the impact of new infrastructure construction on industrial structure upgrading varies across cities. There is a significant driving effect in economically larger cities with better traditional infrastructure, and those in the eastern region. Smaller cities and those with inferior infrastructure have less impact. New infrastructure construction optimizes urban industrial structures through technological innovation and professional agglomeration, according to mediation effect study. Diversified agglomeration does not significantly upgrade industrial structures. The limitations of our model include the fact that the data does not describe industrial structural dynamics and it does not apply on other geographic scales. We illuminate the intricate connection between new infrastructure and industry upgrading by including city heterogeneity and the mediating impacts of technical innovation and professional clustering.