High-speed rail and inventory reduction: Firm-level evidence from China

Leona Shao-Zhi Li () and Chuantao Cui

No 2018-08, RIEI Working Papers from Xi'an Jiaotong-Liverpool University, Research Institute for Economic Integration

Abstract: Using a balanced panel of manufacturing firms from China between 2007 and 2013, we estimate that being connected to a high-speed rail system leads to 9.5% reduction in local firms' input inventory spending. The e ect is stronger for downstream industries and private enterprises. A back-of-envelope calculation suggests that each dollar of HSR investment reduces input inventory stock by 12 cents, which is significantly larger than the e ects found in previous studies based on highway or road investment. Declines in transportation and communication cost, as well as agglomeration e ect are identified as plausible mechanisms. Our findings reveal a micro channel through which improved transport infrastructure brings about economic gains, and contribute to the cost-benefit assessment of high-speed rail investment.

Keywords: Transport infrastructure; high-speed rail; firm performance; inventory; China (search for similar items in EconPapers)
JEL-codes: D21 H54 O18 R4 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2018-10-04
New Economics Papers: this item is included in nep-cna, nep-reg, nep-tra, nep-tre and nep-ure
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Journal Article: High-speed rail and inventory reduction: firm-level evidence from China (2019)
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