Can smart city development alleviate urban shrinkage in the traditional urban development process?

Abstract

This study investigates the potential of smart city pilot policies to mitigate population outflow in shrinking cities in China. Employing a quasi-natural experiment framework, we analyze the effects of these policies using a Difference-in-Differences (DID) model. The findings reveal several key insights. First, while smart city policies can effectively reduce population outflow in shrinking cities, their impact manifests over time, indicating a lag in effectiveness. And the effects fluctuate in the later stages due to the influence of government involvement and urban vitality. We further validate these conclusions through parallel trend and placebo tests. Second, there is significant heterogeneity in the effects of smart city policies: the initial batch of policies introduced in 2012 and the third batch launched in 2014 both demonstrate a positive influence on curbing population decline, with the strongest effects observed in the latter. Notably, these policies are particularly effective in the central and western regions of China, especially in cities characterized by low to medium economic size and fixed asset investment, but have shown poor effect in the eastern regions. However, high technological prerequisites remain essential for the successful implementation of smart city policies. This study aims to provide a comprehensive understanding of the impact of smart city policies on population migration patterns in shrinking cities, offering valuable insights for urban policymakers and practitioners to develop effective strategies for sustainable urban development.