“A tale of two rails”: Transportation infrastructure and technological spillovers from R&D center foreign firms

Abstract

Identifying the pure technology spillover effect of foreign investment is an academic problem. The academic community also knows little about the role of transportation infrastructure in it. For the first time, this article uses the special event of R&D center foreign firms entering to explore how two completely different transportation infrastructures, high-speed rail, and subway, promote technology spillover from foreign investment within the same empirical framework. Based on city-industry-year panel data in China from 2004 to 2020, this article empirically proves that both high-speed rail and subway can promote R&D center foreign firms' technology spillover. Further analysis found that transportation infrastructure and R&D center foreign firms can jointly promote the development of China's key industries, that is, the core effect is stronger for high-tech and strategic emerging industries. This article also provides evidence about cross-city technology spillover from R&D center foreign firms. First, this article takes advantage of the special nature of R&D center foreign firms to provide new ideas for subsequent related research. Second, it empirically confirms that transportation infrastructure can promote foreign investment technology spillovers.