Does smart city construction exacerbate capital misallocation? Spatial spillovers, digital transformation, and robotics application

Haotian Luo

Structural Change and Economic Dynamics, 2025, vol. 73, issue C, 328-344

Abstract: This paper aims to examine the impact of Smart City Construction on capital misallocation in China from a spatial perspective. The findings reveal that Smart City Construction generates significant negative spatial spillover effects on capital misallocation in neighboring cities, with these effects gradually diminishing beyond a 300-kilometer radius. The spillover effects are particularly pronounced in eastern regions, medium-sized cities, and cities with higher administrative status. Furthermore, at the firm level, Smart City Construction tends to exacerbate internal financial misallocation, yet digital transformation and robotics application can partially alleviate these inefficiencies. However, these technological interventions may intensify inter-firm capital misallocation. These findings suggest a dual effect of Smart City Construction and associated technological advancements: while they enhance internal capital efficiency, they may disrupt broader regional capital allocation patterns. Therefore, this study underscores the need to balance internal optimization with external regional impacts, promoting coordinated and sustainable regional development.

Keywords: Smart city construction; Capital misallocation; Spatial spillover; Digital transformation; Robotics application (search for similar items in EconPapers)
JEL-codes: G32 O16 O18 O33 R12 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:streco:v:73:y:2025:i:c:p:328-344

DOI: 10.1016/j.strueco.2025.01.008

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