Technology Finance and Urban Development: A Quantitative Approach to Shaping a New Future for Shrinking Cities

Abstract

Using a dataset of 30 cities of different administrative levels in Liaoning Province, China, for the period 2007-2020, this study proposes a novel quantitative methodology for assessing the impact of socio-economic factors on the attractiveness of shrinking cities. By combining a shrinkage model with principal component analysis and extreme value normalisation of key indicators such as population size, GDP, retail sales of consumer goods, public budget expenditure, and secondary and tertiary employment, we provide a detailed analysis of the phenomenon of shrinking cities and its drivers. Using an interdisciplinary approach involving economics, psychology and sociology, we redefine traditional indicators for assessing the attractiveness of cities by analogising urban population dynamics to the process of molecular transfer in physical chemistry. This approach allows us to quantify the attractiveness of cities in four ways: socio-economic attractiveness, cost of living, public services and employment opportunities. The case study of Fushun illustrates the application of our model, revealing the potential for negative attractiveness across all dimensions and highlighting the multifaceted challenges facing shrinking cities. Our findings highlight the critical role of balanced socio-economic development, well-developed public services, affordable living conditions and adequate employment opportunities in enhancing the attractiveness of cities. This comprehensive framework provides valuable insights for urban planners and policymakers aiming to mitigate urban shrinkage and promote sustainable urban development.