The Causal Effects of Pilot Policies on Low-Altitude Economy Growth—Multi-Period DID and Event-Study Evidence from China

Abstract

As a strategic emerging industry, the low-altitude economy is pivotal to restructuring China’s industrial system and advancing regionally balanced, high-quality growth. Using a provincial panel for 30 regions over 2012–2023, we construct composite indices of the low-altitude economy and the digital economy via an entropy-weighting approach (with PCA as an alternative measure), and identify the causal impact of provincial low-altitude pilot programs through a multi-period difference-in-differences framework combined with an event-study design, controlling for province and year fixed effects. We find that the pilot policy significantly promotes low-altitude development: the index rises by about 47.73 points on average, with effects materializing in the adoption year and persisting for at least three subsequent years. The policy impact is insensitive to baseline digitalization, no statistically significant threshold is detected, and effect sizes strengthen with policy duration, consistent with institutional learning and adaptation. We also document “compensatory selection”: provinces with relatively lagging digital economies but stronger low-altitude industrial foundations are more likely to be designated as pilots. Conditional on pilot status, the digital-economy index is negatively associated with the low-altitude index, suggesting short-run resource substitution. Results remain robust to PSM-DID, placebo tests, instrumental-variable strategies, alternative time windows, and index remeasurement. The study provides credible evidence on the effectiveness of emerging-industry policies and actionable implications for optimizing regional development strategies.