Unraveling the impact of digital highway projects on economic growth: regional competitiveness perspective

Highway projects that harness digital technologies during operation (known as digital highway projects; DHPs) can stimulate economic growth, but limited efforts have been made to fully unravel this mechanism. To address this void, this study examined the impact of DHPs on the economic growth. Specifically, under the auspices of the regional competitiveness theory, the development level of DHPs, transportation demand, new factor endowments, and related and supporting industries were identified and measured first, and their impact on economic growth was then unearthed using data from 11 operational DHPs and a partial least squares structural equation modeling (PLS-SEM) framework. It was observed, from the perspective of stakeholders of our DHPs, that DHPs increase transportation demand, which in turn has a positive effect on a new factor endowment (i.e., data flow) and the development of related and supporting industries, with the former (β = 0.859, p < 0.001) being impacted more than the latter (β = 0.363, p < 0.001). In addition, new factor endowment has a statistically significant impact (β = 0.666, p < 0.001) on the economy, while the development of related and supporting industries is insignificant (β = 0.095, p > 0.05). Finally, although DHPs promote economic growth, this path can be mediated by increased transportation demand and subsequently by the new factor endowment including data flow. As such, this study further develops the regional competitiveness theory in the context of DHPs and provides new empirical evidence on the ‘transportation induced demand’ effect and the growth theory. Practically, this study arms policymakers with a better understanding of how DHPs influence the regional economy, and offers effective and targeted recommendations for managing these projects.