Infrastructure, Industrial Productivity and Regional Specialization in China

Jie Zhang
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Jie Zhang: Graduate School of Economics, Keio University

No 2012-034, Keio/Kyoto Joint Global COE Discussion Paper Series from Keio/Kyoto Joint Global COE Program

Abstract: Infrastructure can affect sectoral productivity and lead to industrial structure changes. Under the framework of Harrigan (1997), this study provides an empirical analysis of the effect of infrastructure on China's industry-level productivity and regional specialization during the period of 1987-2007. We calculate the total factor productivity of 9 manufacturing industries in 28 provinces and study the effects of roads networks, telecommunications, and electric power supply on regional variations in sectoral TFP. We also examine the effect of these infrastructures on the sectoral output share across provinces. By using a structure model of infrastructure accumulation and the 3SLS estimation strategy to control for endogeneity of infrastructure provisions, we find that telecommunications and electric power have positive effects on sectoral TFP performance, while road networks and telecommunications help to explain the regional comparative advantage and production specialization.

Pages: 32 pages
Date: 2013-02
New Economics Papers: this item is included in nep-dev, nep-eff, nep-tra, nep-tre and nep-ure
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