Roads to Innovation: Firm-Level Evidence from China
Published By: IFPRI on eSS | Published Date: July , 2016Although 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].
Author(s): Xu Wang, Xiaobo Zhang, Zhuan Xie, Huang Yiping | Posted on: Jul 25, 2016 | Views() | Download (553)