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Roads to Innovation: Firm-Level Evidence from China

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  • Xu Wang
  • Xiaobo Zhang
  • Zhuan Xie
  • Huang Yiping

Abstract

Although both infrastructure and innovation play an important role in fostering a country’s economic growth, discussion in the literature about how the two are connected is limited. This paper examines the impact of road density on firm innovation in China using a matched patent database at the firm level and road information at the city level. Regional variation in the difficulty of constructing roads is used as an instrumental variable to address the potential endogeneity problem of the road variable. The empirical results show that a 10 percent improvement in road density increases the average number of approved patents per firm by 0.71 percent. Road development spurs innovation by enlarging market size and facilitating knowledge spillover. [IFPRI Discussion Paper 01542].

Suggested Citation

  • Xu Wang & Xiaobo Zhang & Zhuan Xie & Huang Yiping, 2016. "Roads to Innovation: Firm-Level Evidence from China," Working Papers id:11121, eSocialSciences.
    • Handle: RePEc:ess:wpaper:id:11121
    Note: Institutional Papers
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