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The impact of high-speed rail on innovation: An empirical test of the companion innovation hypothesis of transportation improvement with China’s manufacturing firms

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  • Gao, Yanyan
  • Zheng, Jianghuai

Abstract

Garrison and Souleyrette II (1996) elaborated a companion innovation hypothesis which says that improvements in transportation energize innovation in other sectors by creating opportunities to accomplish old things well or do something new. However, existing literature provides limited direct evidence on this hypothesis. The fast rollout of high-speed rail (HSR) in China is explored as a natural experiment to test the hypothesis by matching it with three waves of innovation surveys on manufacturing firms from counties in the Yangtze River Delta and Pearl River Delta, China’s two most developed regions. The empirical results, obtained using the difference-in-differences method, show that HSR connection promotes firm innovation in peripheral areas, which is larger in the Yangtze River Delta and increases over time but switches from promoting process innovations to stimulating product innovation. Further studies show that HSR connection promotes innovation by arousing entrepreneurs’ awareness of the importance of innovation and intellectual property protection, opening new sources for innovation and bringing about market size effects.

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  • Gao, Yanyan & Zheng, Jianghuai, 2020. "The impact of high-speed rail on innovation: An empirical test of the companion innovation hypothesis of transportation improvement with China’s manufacturing firms," World Development, Elsevier, vol. 127(C).
    • Handle: RePEc:eee:wdevel:v:127:y:2020:i:c:s0305750x19304875
    DOI: 10.1016/j.worlddev.2019.104838
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    20. Dongxiao Niu & Weizeng Sun & Siqi Zheng, 2020. "Travel costs, trade, and market segmentation: Evidence from China's high‐speed railway," Papers in Regional Science, Wiley Blackwell, vol. 99(6), pages 1799-1825, December.

    More about this item

    Keywords

    Transportation; High-speed rail; Companion innovation; Manufacturing firms; China;
    All these keywords.

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • L92 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Railroads and Other Surface Transportation
    • P25 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Urban, Rural, and Regional Economics

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