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Industrial Technology Progress

The Impact of Artificial Intelligence on Industrial Structure Up⁃ grading 

—Evidence from "China's New Generation Artificial Intelligence Inno⁃ vation and Development Pilot Zones" 

Zhao Yubo1,2 , Shen Jiahui3 , Liu Huan4 , Han Lexian3 

(1.School of Business and Administration, Henan University of Economics and Law, Zhengzhou 450046, China; 2.Business School, Henan University, Kaifeng 475004, China; 3.School of Data Science and E-Commerce, Henan University of Economics and Law, Zhengzhou 450046, China; 4.School of Statistics, Henan University of  Economics and Law, Zhengzhou 450046, China)

Abstract: In the context of the widespread application of digital technology, artificial intelli⁃ gence (AI) is gradually and deeply integrated with economic development. The application sce⁃ narios in various industries constantly expand, injecting new impetus into the industrial structure  upgrading (ISU). In this paper, using the panel data of 284 prefecture-level cities in China from  2015 to 2022, we adopt a multi-period double-difference model to measure the degree of ISU by  using the proportion of output value of tertiary industry and secondary industry, and conduct a  quasi-natural experiment by constructing a dummy variable based on the policy of "China's  New Generation Artificial Intelligence Innovation and Development Pilot Zone" to study the im⁃ pact of AI on ISU and its functioning mechanism. Heterogeneity tests are also conducted to ana⁃ lyze variations based on geographical location and administrative level of cities to understand the  differing roles of AI across regions. The empirical study reveals several key findings: ①The de⁃ velopment of AI promotes the ISU. The conclusions remain reliable after various robustness tests  such as the parallel trend test, placebo test, and exclusion of relevant policy interference. ② Mechanism analysis shows that AI promotes the ISU through three mediating variables, namely, new quality productivity, digital financial inclusion, and innovation levels, indicating the intrin⁃ sic mechanism of AI on the ISU. ③Heterogeneity analysis finds that the impact of AI on the ISU  is more significant in eastern, coastal, and high-administrative-level cities. The main reasons  for this lie in the differences in economic foundations, the significant knowledge spillover effectand technology diffusion characteristics of AI technology, and the high quality and ability of lo⁃ cal administrators, respectively. Based on the above conclusions, this paper puts forward tar⁃ geted policies and development suggestions from three aspects. First, the government should pay  attention to the role of AI in the ISU, and expand the application scenarios of AI in various indus⁃ tries by improving the AI-supporting infrastructure to promote the intelligence, sustainability, and integration of the industrial structure. Second, the government should focus on developing  new urban productivity, fostering digital inclusive finance, and enhancing innovation levels, so  as to give full play to the effectiveness of these three key factors in the ISU. Third, the govern⁃ ment should leverage the benefits of AI to support the advancement of the industrial structure, tailored to regional resource endowments and local conditions. Eastern regions, coastal areas, and high-administrative-level cities should make full use of their policy, financial, infrastruc⁃ ture, and talent advantages to develop the AI industry. Meanwhile, western regions, inland ereas  and low-administrative-level cities should utilize their resource advantages to absorb some of  the extended AI industries in the eastern regions, coastal areas and high-administrative-level  cities. This paper provides empirical evidence for promoting high-quality economic development  and industrial transformation in China from the perspective of AI-enabled ISU. 

Key words: artificial intelligence; industrial structure upgrading; new quality productive  forces; digital inclusive finance; innovation level