Effects of Public Investment on Sustainable Urban Development

Abstract

In the past, for urban governance issues, local governments tended to only focus on the economic development of cities, but in recent years, in the context of the global pursuit of sustainable goals, how to propose public investment policies that can attract more people willing to relocate to cities has become more important. This paper explores the impact of public investment with different goals (types) on urban development to illustrate that public investment only in pursuit of economic development (income growth) may result in cities deviating from achieving their sustainable goals. Excessive housing prices and pollution may reduce people’s willingness to move there. Only investing in both economic development and infrastructure that can improve the living environment may enable cities’ housing prices and populations to grow moderately. By constructing a theoretical model and numerical simulation analysis, this paper not only explains the positive and negative externalities of public investment but also proposes what factors affect cities’ housing prices, population, and the benefits of public investment. The results of this paper can help local governments formulate urban governance policies and supplement the literature on sustainable cities.