Infrastructure investment and economic growth quality: empirical analysis of China’s regional development

Jin Zhou, Ali Raza and Hongguang Sui

Applied Economics, 2021, vol. 53, issue 23, 2615-2630

Abstract: The study aims to systematically examine the role of infrastructure investment on the quality of economic growth by using the regional panel data of 29 Chinese provinces. A comprehensive index is developed using the principal component analysis (PCA) to observe the economic growth quality. Regression results show that China’s infrastructure investment has not exceeded the threshold, and the quality of economic growth has improved significantly. The results were robust using the regional average investment level and infrastructure stock as instrumental variables for 2SLS and system GMM testing. Further, the mediation analysis confirms that infrastructure investment improves economic growth through the physical and material circulation of resources, market integration, and knowledge capital evolution. Overall the results provide more profound policy enlightenment with regards to infrastructure investment.

Date: 2021
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DOI: 10.1080/00036846.2020.1863325

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