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Does power grid infrastructure stimulate regional economic growth?

Zhen Xu, Debasish Das (), Wei Guo and Wendong Wei

Energy Policy, 2021, vol. 155, issue C

Abstract: What are the effects of power grid infrastructure investment on the regional economy, and what explains these effects? This paper uses the restricted profit model and a seemingly unrelated regression (SUR) to estimate the short-term and long-term effects of power grid infrastructure on regional economic growth in 30 provinces in China from 1998 to 2017. Our results show that (1) power grid infrastructure investment has a significant positive effect on regional economic growth; (2) the associated long-term impact on the economy is greater than the short-term impact; (3) regions with high energy demands and good industry fundation benefit more from power grid infrastructure in the long term; (4) the output elasticity of power-importing and balancing regions maintained an upward trend after an electricity shortage problem had been solved, while the elasticity in power-exporting regions was positive but steadily decreased because of the resource curse effect. This paper suggests that in the current stage, the power grid infrastructure is a good policy tool to drive regional economies. However, there are differences in investment priorities among different regions.

Keywords: Power grid infrastructure; Regional economic growth; Short-term impact; Long-term impact (search for similar items in EconPapers)
JEL-codes: H54 Q43 Q48 R11 (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1016/j.enpol.2021.112296

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