Understanding the Dynamics of Urban Shrinkage and the Impact on Innovation in China: A Comprehensive Analysis

In the evolving landscape of urban development and city planning, the concept of “urban shrinkage” has gained significance, extending its footprint beyond the Western world to include developing nations like China. This research paper delves into the intricate relationship between urban contraction and urban innovation, shedding light on the mediating mechanisms that significantly inhibit the level of urban innovation. Through empirical analysis, it is revealed that urban shrinkage discourages entrepreneurship and reduces urban investment, impeding innovation. The study also uncovers that proximity to central cities intensifies the impact of urban shrinkage on innovation, highlighting the need for comprehensive regional development strategies. Surprisingly, higher levels of digitalization weaken the inhibitory effects of urban shrinkage on technological innovation, emphasizing the role of technology in revitalizing shrinking urban areas. Furthermore, the research categorizes shrinking cities into territorial, central, and peripheral types, elucidating varying impacts on innovation. It underscores the importance of tailoring policies to the specific characteristics of each category of shrinking cities. Regional disparities in the impact of urban shrinkage are also identified, emphasizing the need for context-specific interventions. The theoretical implications of this study contribute to advancing our understanding of the interplay between urban shrinkage and innovation. In contrast, the policy implications provide valuable guidance for policymakers, urban planners, and local authorities facing the challenges of urban shrinkage in China. Initiatives to encourage entrepreneurship, enhance urban accessibility, promote digitalization, and address regional disparities are essential for fostering innovation and sustainable urban development in shrinking cities.