A recent study published in the International Review of Economics & Finance explores the connection between smart city development and urban convenience. Using open data from prefecture-level cities in China between 2012 and 2021, the research highlights how smart city initiatives enhance urban living by improving resource allocation, driving innovation, and promoting entrepreneurship.
Study: Construction of smart city and enhancement of urban convenience: A Quasi-Natural Experiment based on a smart city pilot. Image Credit: THINK A/Shutterstock.com
Background
As cities grow rapidly, many struggle with "urban diseases" like pollution and overcrowding. In China, over 80 % of cities are considered "sub-healthy," with only 42 achieving a relatively high level of development. To tackle these challenges, the Chinese government launched a new urbanization plan that sees smart cities as a key solution.
Smart cities use technologies like big data, artificial intelligence, 5G, and blockchain to help urban planners manage these issues more effectively. This study set out to analyze how these initiatives impact urban convenience, using data from 2012 to 2021.
Methods
China's first batch of smart city pilots started in 2012, followed by more in 2013 and 2014. Because these programs rolled out at different times in different places, researchers had a natural experiment to work with. Using a difference-in-differences (DID) model, they measured how smart city development affected urban convenience.
To do this, they defined a "basic living circle"—a 1 km radius (about a 15-minute walk)—and used it to calculate an urban convenience index. They also analyzed data from 23 major point-of-interest (POI) categories to get a complete picture.
The study relied on three key data sources:
- A list of smart city pilot programs to track policy rollout.
- POI data covering all districts and counties in China from 2012 to 2019. They used ArcGIS software to divide cities into 1 km x 1 km grids, measuring the density of public facilities and overall convenience.
- The Statistical Yearbook of Chinese provinces and cities for additional control variables. Any missing values were filled using interpolation techniques.
Results and Discussion
The study’s findings are broken into three key areas:
- Benchmark regression results, confirming that smart city policies improved urban convenience.
- Robustness tests, which checked for consistency using parallel trend analysis, placebo checks, and other methods.
- Heterogeneity analysis, looking at how the impact varied based on a city’s location, population size, and economic function.
The data showed that before smart city projects were implemented, cities didn’t differ significantly in terms of convenience. But once these initiatives rolled out, urban convenience saw a major boost—one that kept increasing over time.
Interestingly, the effects weren’t the same everywhere. While eastern and coastal cities didn’t see much change, central, western, and non-coastal cities benefited significantly. Smaller cities (those with fewer than 3 million people) and non-industrial cities also saw more improvements than larger or resource-heavy cities.
Conclusion
Using a multi-year DID approach, the study provides solid evidence that smart city initiatives make urban life easier by optimizing resources, integrating advanced technologies, and fostering entrepreneurship.
However, the impact varies by region. The biggest improvements were seen in non-coastal cities, central and western China, smaller cities, and those without a strong industrial base. To maximize the benefits of smart city development, policymakers should tailor their strategies to fit the unique needs of each city. By doing so, they can improve public services and enhance residents’ overall quality of life.
Journal Reference
Chen, X., Wang, Q., & Zhou, J. (2025). Construction of smart city and enhancement of urban convenience: a Quasi-Natural Experiment based on a smart city pilot. International Review of Economics & Finance, 103875. DOI: 10.1016/j.iref.2025.103875, https://www.sciencedirect.com/science/article/pii/S1059056025000383
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