Digital infrastructure and entrepreneurship: Evidence from China's broadband expansion

Digital infrastructure is widely regarded as a driver of economic transformation, yet its causal effect on entrepreneurship remains unclear. This study exploits the staggered rollout of “Broadband China” strategy as a quasi-natural experiment and applies a multi-period difference-in-differences design using data from 290 cities between 2010 and 2023. The results indicate that broadband expansion significantly increases city-level new firm registrations. These findings remain robust to extensive checks, including staggered difference-in-differences estimators that account for heterogeneous treatment effects and an instrumental variable based on historical distance to the fiber-optic backbone network. Mechanism analysis identifies three channels: improved information exchange, reduced financing constraints, and improvements in the business environment, reflected in lower rent-seeking. The effects are concentrated in technology-intensive sectors, indicating a structural shift toward knowledge-intensive activities. Overall, the findings suggest that broadband investment can function as an effective policy tool for promoting inclusive entrepreneurship in the digital era.