This paper empirically examines the impact of intelligent applications on capital flows. The study finds that artificial intelligence (AI) has facilitated the establishment of subsidiaries by firms across diverse locations. Key mechanisms through which AI drives capital flows include reducing off-site investment management costs, expanding high-skilled employment, optimizing the skill structure of the workforce, enhancing the allocation efficiency of technological and scientific talent, and promoting the diffusion of technical knowledge. The off-site investment effect of AI is particularly significant in non-state-owned enterprises, manufacturing firms, and businesses located in regions with pronounced labor market segmentation and advanced digital infrastructure. Further analysis reveals that AI applications transcend spatial constraints, encouraging firms to invest in more distant cities. Additionally, AI applications contribute to the flow of capital from smaller to larger cities. This paper provides empirical evidence and policy insights on how intelligent transformation can facilitate the smooth flow of capital in the new era.
Huang et al. (Sun,) studied this question.