The impact of intra-regional road networks on small business dynamics in China

This study extends existing literature, which primarily addresses the economic impact of inter-regional transport infrastructure, by examining the role of four types of intra-regional roads on small business formation, closure, and net growth. Using a county-level panel dataset from China spanning 2014 to 2019 and a fixed-effects instrumental variable (FE-IV) approach, we find that tertiary roads, characterized by pedestrian-friendly designs, significantly promote small business registrations and reduce closures, fostering sustained entrepreneurial growth. In contrast, primary, secondary, or branch roads are either associated with fewer new firm establishments, higher business closures, or negative net business growth. Heterogeneity analyses highlight sector-specific and regional variations. By integrating multiple intra-regional road types into a unified empirical framework to analyze their distinct impact on small business dynamics, this study fills critical gaps in the literature and provides actionable insights for policymakers aiming to optimize local infrastructure for small business development.