Restoring inland prosperity: The impact of the New International Land-Sea Corridor on corporate internationalization and regional wealth gaps

Abstract

Enabling inland regions in developing countries to participate in the global market and overcome poverty remains a significant challenge. In this study, we use the International Land-Sea Trade Corridor (ILSTC) strategy as a quasi-natural experiment exploring the impact of inland infrastructure development on the internationalization of manufacturing enterprises located over 1000 km from the ocean. Our findings indicate that the construction of ILSTC significantly increases the likelihood, by 5.6 %, of these inland enterprises engaging in international markets. Further analysis reveals that the reduction in geographical distance primarily enhances the likelihood of enterprise internationalization by boosting export and import activities, outward investment, and participation of foreign suppliers. Furthermore, heterogeneity analysis shows the positive impact of the ILSTC to be more pronounced in smaller-scale companies facing stronger financial constraints. The macroeconomic impact test shows that the strategy has led to a 1.7 % increase in residents' income, a 3.5 % increase in per capita GDP, and a 7.6 % rise in per capita light intensity, contributing to narrowing the wealth gap between inland and coastal regions.