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How Does New Infrastructure Investment Affect Economic Growth Quality? Empirical Evidence from China

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  • Xin Du

    (School of Economics and Management, Zhejiang Sci-Tech University, Hangzhou 310018, China)

  • Hengming Zhang

    (Urbanization Development Research Center of Zhejiang Province, Hangzhou 310005, China)

  • Yawen Han

    (School of Economics and Management, Zhejiang Sci-Tech University, Hangzhou 310018, China)

Abstract

The current phase of the technological revolution and the accelerated rate of industrial change have encouraged the structural transformation of global infrastructure investment. This study aims to identify and evaluate the impact of new infrastructure investment on economic growth quality. This paper explains the theoretical mechanisms in terms of their effects on technological innovation, industrial structure, and productivity, using the three-dimensional analysis framework of economic growth conditions, process, and results. We then carry out an empirical examination based on provincial panel data for China from 2004 to 2019. The findings demonstrate that new infrastructure investment can significantly improve economic growth quality, and this conclusion still seems valid after conducting endogeneity treatments and robustness tests. Further mechanism evaluations indicate that new infrastructure investments contribute to boosting economic growth quality in terms of the condition, process, and results of economic growth by promoting technological innovation, improving industrial structure, and enhancing production efficiency. Moreover, the magnitude and mechanism of the positive effects differ depending on the heterogeneity of the region examined. In terms of the nonlinear change characteristics, the significant dual-threshold effect reveals that the marginal effects of new infrastructure investment on economic growth quality tend to be incremental under the threshold condition. This study provides a theoretical and factual basis for governments to enforce new infrastructure investments in the digital economy era, and it also has some value as a reference regarding the economic sustainability of developing countries.

Suggested Citation

  • Xin Du & Hengming Zhang & Yawen Han, 2022. "How Does New Infrastructure Investment Affect Economic Growth Quality? Empirical Evidence from China," Sustainability, MDPI, vol. 14(6), pages 1-30, March.
    • Handle: RePEc:gam:jsusta:v:14:y:2022:i:6:p:3511-:d:772897
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