Does Infrastructure Have Threshold Effect on Total Factor Productivity? Empirical Analysis Based on Panel Data of 256 Cities in China

Zhifeng Wang, Changwei Zhan (zhanchangwei@126.com) and Lingyu Guo
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Zhifeng Wang: Central University of Finance and Economics
Changwei Zhan: National University of Singapore
Lingyu Guo: Central University of Finance and Economics

A chapter in Proceedings of the 24th International Symposium on Advancement of Construction Management and Real Estate, 2021, pp 465-479 from Springer

Abstract: Abstract China’s economic growth has gradually turned from factor-driven to innovation-driven. The efficiency of economic growth, which can be represented by total factor productivity (TFP), has attracted wide attention. Although the linear relationship between infrastructure and TFP has been widely studied by scholars, there may be a more complicated nonlinear relationship between them. This paper focuses on both economic infrastructure and social infrastructure and calculates the TFP of 256 cities at prefecture level or above in China from 2004 to 2015. The results of the threshold regression model show that infrastructure (road, bus, green area, hospital bed, etc.) does have threshold effects on TFP. When the threshold variable is infrastructure, the impact of infrastructure on TFP below the threshold value is higher than that impact above the threshold value. When the threshold variable is GDP per capita, the impact of infrastructure below the threshold value is lower than that impact above the threshold value. Furtherly, on the basis of empirical results, sample cities are divided into four categories, including initial stage, increasing stage, trapped stage, and stable stage. Their urban development paths, features, and spatial distributions are also studied. This paper finds that the infrastructure doesn’t promote TFP efficiently in most cities. For the purpose of improving the efficiency of economic growth, urban infrastructure investment and construction should pay more attention to the different effects of infrastructure on TFP in different urban stages.

Keywords: Infrastructure; Total factor productivity; Threshold effect; Urban development path (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-981-15-8892-1_33

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DOI: 10.1007/978-981-15-8892-1_33

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