Governance through intelligence: how smart cities enhance new quality productive forces

Although digitalization has progressed rapidly, there is still a limited empirical understanding of how smart governance contributes to the evolution of new quality productive forces (NQPF) in developing countries. This study exploits the implementation of the smart city initiative as a policy shock and draws on panel data from Chinese cities spanning 2007 to 2019. The results indicate that smart city development is associated with a statistically significant increase in the growth of NQPF. Moreover, the estimated effects are stronger for new labor tools and new labor objects than for new labor force. Specifically, smart city initiatives facilitate greater governmental digital subsidy support for strategic emerging industries, significantly increasing both the breadth and depth of digital subsidies they receive. Additionally, smart city policies improve the local digital development environment while attracting digital enterprises and talent, fostering spatial agglomeration. Moreover, the influence of smart city development on strengthening NQPF varies according to a city’s degree of innovation capacity and the extent of focus it receives from both governmental agencies and the public. Notably, the policy-driven promotion of NQPF through smart city initiatives is more substantial in large urban centers, non-resource-based cities, and municipalities that do not belong to the category of old industrial bases.