Regional impact and spillover effect of public infrastructure investment: An empirical study in the Yangtze River Delta, China

Juanfeng Zhang, Danxia Zhang, Lele Li and Hui Zeng

Growth and Change, 2020, vol. 51, issue 4, 1749-1765

Abstract: Since China's reform and opening up, public infrastructure investments have significantly improved. These investments drive China's long‐term economic growth. Based on panel data of 41 cities in the Yangtze River Delta from 2006 to 2017, the simultaneous equation models (SEMs) are constructed to explore the regional impact and spillover effect of infrastructures with resolving endogenous problems. Public infrastructure investment remains to have a systemic effect on household income, urban population, and land prices in certain regions. In certain region, the estimated coefficients of public infrastructure investment are consistent with expectations and significant, which are 0.523, 0.142, and 0.781 with three‐stage least squares method. And the endogenous variables also affect public infrastructure investment. But, the coefficient of the spatial term is −0.019, negative and not significant. The cross‐regional spillover effect of public infrastructure investment is nonsignificant using the generalized spatial three‐stage least squares method.

Date: 2020
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