Urban Infrastructure Development in China: A Multi-dimensional Spatial Peer Effect Perspective

• Published in: Applied spatial analysis and policy Vol. 18; no. 2
• Main Authors: Cao, Dongping, Xia, Qianqian, Zha, Libin
• Format: Journal Article
• Language: English
• Published: Dordrecht Springer Netherlands 01.06.2025; Springer Nature B.V
• Subjects: Cities; Economic development; Economics; Government spending; Human Geography; Infrastructure; Irrationality; Landscape/Regional and Urban Planning; Panel data; Peers; Public finance; Public works; Regional/Spatial Science; Social Sciences; Socioeconomic development; Socioeconomics; China; Spatial econometric model; Peer effects; Irrational investment; Urban infrastructure development; China
• ISSN: 1874-463X; 1874-4621
• DOI: 10.1007/s12061-025-09678-y

The development of urban infrastructure as a critical public spending with multi-faceted benefits but high investment costs is deeply embedded in complex socio-economic and institutional contexts. Drawing on spatial econometric models and the panel data of 261 cities in China during 2002–2022, this study explores how the municipal infrastructure development activities of cities with heterogenous socio-economic characteristics are impacted by the behaviors of their peers through multi-dimensional spatial interactions. The results indicate that a city’s urban infrastructure development activities are significantly impacted by its economically, administratively, and geographically related peers. It is further illustrated that different dimensions of peer effects do not operate in isolation and that the most substantial peer effect is among geographically proximate cities. The results also suggest a significant “race to the top” tendency in municipal infrastructure development, with the decisions of a local city being more significantly impacted by those economically prominent cities. The mechanism analysis further indicates that these peer effects stem from both inter-city learning and competition but are not weakened by internal learning effect. The results also provide evidence for the imbalance to address socio-economic needs and the fiscal irrationality in infrastructure development under peer influences. The findings contribute to a deepened understanding of how cities with heterogenous socio-economic development needs and fiscal capabilities concretely interact with each other for urban infrastructure development and provide insights into how the interaction-driven development actions can be more efficiently and rationally managed to facilitate regional socio-economic development.