The Effect of Smart City Policies on City Innovation—A Quasi-Natural Experiment from the Smart City Pilot Cities in China

Abstract

The smart city pilot plan plays a pivotal role in the modernization of urban development within Digital China. To accelerate economic growth and establish a nation driven by innovation, it is crucial to examine the impact of smart city pilot programs on urban innovation. This research evaluates the effects of these policies using a multi-period difference-in-differences (DID) model. The findings indicate a significant enhancement in innovation levels within cities that participated in China’s smart city pilot program. These results remain robust even after rigorous validity tests. Mechanism testing reveals that the development of smart city pilot cities primarily boosts urban innovation through industrial upgrading and increased informatization. Additionally, heterogeneity tests show that the influence of smart city policies on urban innovation varies according to the geographical characteristics of different cities. Based on these insights, this study provides recommendations to further strengthen urban innovation by optimizing smart city policies. These include crafting differentiated smart city strategies, promoting the digital transformation of cities, and increasing economic support for smart city initiatives.