Research on the Impact of Transportation Networks on the Innovation of Manufacturing Firms Considering Capital Mobility

This paper employs a data set involving macro-level urban panel data from the Chinese industrial enterprise patent database to investigate the impact of transportation infrastructure on innovation in the manufacturing industry in the Yangtze River Delta. The following are the primary conclusions: First, according to the results of the baseline calculation, manufacturing businesses’ patent output is significantly boosted by improvements in transportation infrastructure. Second, we eliminate the endogeneity issue by introducing instrumental variables. Additionally, we verified the robustness of the estimation results by replacing the measurement of variables and changing the samples. Third, we find the heterogeneous impacts of transportation infrastructure on innovation among manufacturing enterprises in terms of firm attributes, industry level, regional location, and financial shock. Finally, the mechanism test results of this paper indicate that improving urban transportation infrastructure facilitates the flow of capital factors, enhances the centrality of cities in the capital network, and subsequently fosters the innovation output of manufacturing enterprises. Moreover, we further investigate the positive impact of new firms’ entry in promoting industry competition and firm innovation.