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

The Impact of Tourism on Economic Growth: Evidence from Aceh Province, Indonesia

“…Coefficient value obtained is positive 0.0788 indicates that if Infrastructure increase as much 1 km, economic growth will also increase as much 0.0788 percent. Previous studies in line with this finding are study by Novitasari et al, (2020) and Du et al, (2022) also found Infrastructure had significant and positive effect toward Economic Growth.…”

“…This research use multiple regression approach and found that infrastructure has significant and positive impacts on economic growth. Du et al, (2022) identified and evaluated the impact of new infrastructure investment on economic growth quality in China from 2004 to 2019. The findings demonstrate that new infrastructure investment has positive impact and significantly improve economic growth quality.…”

“…Novitasari et al (2020) investigated the impacts of infrastructure development on economic growth in all regencies and cities of three provinces in Indonesia which are West Java Province, DKI Jakarta Province, and Banten Province. Du et al (2022) identified and evaluated the impact of new infrastructure investment on economic growth quality in China from 2004 to 2019. Pratiwi & Dewi (2021) analysed the effect of investment, labour, and minimum wages on economic growth in the regencies/cities of Bali Province, Indonesia, with panel data for nine years between 2011-2019.…”

Whether Infrastructure Investment Can Still Light the Way for China's Economic Carriage?

“…The recent statistic has showed the new investment in the field of digital economy has contribute 67.9% to the economic growth [11]. Current investments in new infrastructure promote economic growth by fostering innovation in the digital sector, facilitating economic transformation, and improving productivity [12].…”

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