Impact of Industrial Investment on Urban Economic Resilience: Evidence from Third Front Construction in China

In the 1960s and 1970s, China made the strategic decision of “Third Front Construction” (TF) in response to a complex and volatile international situation, proposing to shift the center of gravity of its industry from the east to the central and western regions for national security purposes. This decision not only resolved the national security threats faced by China at that time but also enhanced the industrialization level of the cities in central and western China. This paper constructs a DID model based on the TF as a quasi-natural experiment and uses panel data from 382 counties in Henan, Hubei and Hunan provinces of China from 1993 to 2002 to assess the impact of industrial investment on urban economic resilience in TF. This paper finds that industrial investment in TF significantly enhances the economic resilience of China’s TF areas. Moreover, in the face of the impact brought by the financial crisis, the ability of TF cities to withstand the crisis is stronger than their capacity for economic recovery. The findings provide theoretical support for understanding the economic effects of industrial investment in TF, especially in the context of strategic competition among major global powers and offer a new perspective for China’s future industrial policy.