Connective financing: Chinese infrastructure projects and the diffusion of economic activity in developing countries

Richard Bluhm, Axel Dreher, Andreas Fuchs, Bradley C. Parks, Austin M. Strange and Michael J. Tierney

Open Access Publications from Kiel Institute for the World Economy from Kiel Institute for the World Economy (IfW Kiel)

Abstract: This paper studies the causal effect of transport infrastructure on the spatial distribution of economic activity within subnational regions across a large number of developing countries. To do so, we introduce a new global dataset of geolocated Chinese grant- and loan-financed development projects from 2000 to 2014 and combine it with measures of spatial concentration based on remotely sensed data. We find that Chinese financed transportation projects decentralize economic activity within regions, as measured by a spatial Gini coefficient, by 2.2 percentage points. The treatment effects are particularly strong in regions that are less developed, more urbanized, and located closer to cities.

Keywords: Development finance; Transport costsInfrastructure; Foreign aid; Spatial concentration; China (search for similar items in EconPapers)
JEL-codes: F35 O18 O19 P33 R11 R12 (search for similar items in EconPapers)
Date: 2025
New Economics Papers: this item is included in nep-ppm and nep-tre
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwkie:318203

DOI: 10.1016/j.jue.2024.103730

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