State-led urbanization and technological innovation: A quasi-natural experiment from county-to-district conversion in China

Abstract

Different from the market-led urbanization in western countries, China's urbanization process has the characteristics of being state-led, in which county-to-district conversion (CTDC) policy plays a key role in promoting urbanization. Our study uses the data of 279 cities as a simple to explore the effect of the state-led urbanization of CTDC on technological innovation. We find that CTDC significantly promote innovation, and this promoting effect is enhanced with the improvement of urban innovation ability. The mechanism test shows that financial expenditure on education and science, population agglomeration, information and communication technology industry are three channels for CTDC to boost technological innovation. We also find that this promotion effect is more obvious in eastern cities and the cities with higher administrative hierarchy, and is weakest in western cities, however, CTDC adjustment in northeastern cities significantly inhibited technological innovation. Further research shows that when the distance between merged county and city administrative center within 20 km, the effect is negative, after the distance is more than 20 km, with the increase of distance, the promoting effect of CTDC increases.