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The direct and indirect effects of infrastructure on firm productivity: Evidence from Chinese manufacturing

Guanghua Wan () and Yan Zhang

China Economic Review, 2018, vol. 49, issue C, 143-153

Abstract: This paper attempts to distinguish and estimate the direct and indirect effects of infrastructure on firm productivity. The latter arises from the infrastructure-agglomeration link and has been largely overlooked in the literature on infrastructure. An analytical framework is then proposed to estimate both effects. Finally, empirical results are obtained using large-scale firm-level survey data from China. Major findings include: (1) all the three kinds of infrastructure–road, telecommunication servers and cable–are found to directly promote firm productivity; (2) they also exert a positive indirect effect on firm productivity through the agglomeration channel; and (3) the empirical results are robust to different agglomeration indicators and different subsamples.

Keywords: Infrastructure; Indirect effect; Firm productivity; Agglomeration (search for similar items in EconPapers)
JEL-codes: D21 D23 L1 R12 R3 (search for similar items in EconPapers)
Date: 2018
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China Economic Review is currently edited by B.M. Fleisher, K. X. D. Huang, M.E. Lovely, Y. Wen, X. Zhang and X. Zhu

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Handle: RePEc:eee:chieco:v:49:y:2018:i:c:p:143-153