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Do Internet Development and Urbanization Foster Regional Economic Growth: Evidence from China’s Yangtze River Economic Belt

Shunbin Zhong, Mengding Li (), Yihui Liu and Yun Bai
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Shunbin Zhong: School of Business, Minnan Normal University, Zhangzhou 363000, China
Mengding Li: School of Business Administration, Zhongnan University of Economics and Law, Wuhan 430073, China
Yihui Liu: Business School, Nankai University, Tianjin 300071, China
Yun Bai: Faculty of Social Sciences, University of Southampton, Southampton SO16 7NS, UK

Sustainability, 2023, vol. 15, issue 12, 1-14

Abstract: Internet development and urbanization are widely perceived to have a significant impact on the economy and sustainability in China. However, existing studies fail to consider their interaction patterns and directions with economic growth in China’s Yangtze River Economic Belt (YREB). This study applies a bootstrap panel Granger causality test to examine the causal relationships between Internet development, urbanization, and regional economic growth for the YREB‘s 11 provinces. The main findings are as follows: (1) Internet development, urbanization and regional economic growth exhibit cross-sectional dependence and province-specific heterogeneity in the YREB. (2) Granger causality from Internet development to economic growth exists in most provinces, while Granger causality from economic growth to Internet development and two-way Granger causality are only observed in economically developed provinces, such as Shanghai, Jiangsu, Zhejiang, and Chongqing. (3) Granger causality from urbanization to economic growth exists in nine provinces, except for Hubei and Guizhou. However, the reverse Granger causality is only confirmed in Jiangsu, Anhui, and Hubei. This suggests that urbanization significantly improves economic growth efficiency, but the effect of economic growth on urbanization is restricted by regional bias policies. Therefore, the local government should implement tailored economic policies and establish an interactive mechanism to help China leverage its potential for economic growth and sustainability.

Keywords: internet development; urbanization; economic growth; bootstrap panel Granger causality test (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2023
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