The Impact of New Infrastructure Development on Entrepreneurial Activity

Abstract

We investigate how the development of new infrastructure influences entrepreneurial dynamics across China, utilizing panel data from 30 provincial-level administrative units (excluding Tibet, Hong Kong, Macao, and Taiwan) between 2007 and 2022. The analysis focuses on three key dimensions of infrastructure development: "information infrastructure", "integrated infrastructure", and "innovation infrastructure". The results show that: (1) all three types of "new infrastructures" have a significant and stable positive effect on entrepreneurial activity. (2) In particular, "information infrastructure" is particularly significant in enhancing entrepreneurial activity, and its main mechanism is that "information infrastructure" promotes the development of innovative industries, lowers market entry barriers, and greatly facilitates information exchange and interaction, thus contributing to the formation of a favorable entrepreneurial environment. The main mechanism is that "information infrastructure construction" promotes the development of innovative industries, lowers market entry barriers, and greatly facilitates information exchange and interaction, thus contributing to the formation of a favorable entrepreneurial ecosystem. (3) A further classification test of 30 provinces according to their level of economic development shows that "new infrastructure" has a more significant entrepreneurial incentive effect in provinces with a higher level of economic development, which implies that the continuous improvement of the business environment and policy system is the key to further realize the entrepreneurial incentive effect of "new infrastructure", which is the key to further improve the business environment and policy system. This implies that continuous improvement of the business environment and policy system is the key to further realize the entrepreneurship promotion effect of the "new infrastructure".