High-speed railway and city industrial upgrading in China: A quasi-experimental study

Abstract

This paper investigates the effect of High-speed Railway (HSR) on city industrial upgrading. Using the Annual Survey of Industrial Firms (1998–2015) and HSR opening information in China, we conduct a difference-in-differences-in-differences (DDD) analysis on 300 prefecture- and higher-level cities and 389 4-digit manufacturing industries. We find that HSR enables cities to enter more complex industries, and this result is robust under parallel trend test, placebo test, instrumental variable estimation, and other specifications. Mechanism analysis shows that HSR could promote city industrial upgrading by attracting foreign direct investment (FDI), producer services, and high-quality human capital. Heterogeneity analysis indicates that developed regions benefit more from HSR than undeveloped regions in industrial upgrading. We contribute to Evolutionary Economic Geography by considering HSR as a regional external linkage and by integrating causal analysis in the study of regional diversification.