The Impact of Broadband Infrastructure Construction on FDI Inflows ——Evidence from the Broadband China Pilot Policy

Based on the city data in China from 2005 to 2020, the article empirically analyzes the impact of broadband infrastructure construction on FDI inflows by using the Broadband China Pilot Policy (BCPP) as a quasi-natural experiment with a staggered DID model. The study shows that the BCPP has a significant positive effect on FDI inflows, and passes the parallel trend tests and various robustness tests. The BCPP attracts FDI inflows by reducing transaction costs and expanding consumption size. Human capital and innovation capability can moderate the relationship between broadband infrastructure construction and FDI inflows. The higher the level of human capital, the stronger the urban innovation capability, the greater the promoting effect of broadband infrastructure construction on FDI inflows. Heterogeneity analysis reveals that the promotion effect of the BCPP on FDI inflows is particularly significant in cities in the central and eastern regions, with large populations and good traditional infrastructures. The article not only extends the economic effects of the BCPP to international investment, but also provides a new explanation for stabilizing the scale of foreign investment from broadband infrastructure in China. JEF: F125