Transport Infrastructure, City Productivity Growth and Sectoral Reallocation: Evidence from China

Yang Yang

No 2017-08, RIEI Working Papers from Xi'an Jiaotong-Liverpool University, Research Institute for Economic Integration

Abstract: This paper examines the impact of highway expansion on aggregate productivity growth and sectoral reallocation between cities in China. To do so, I construct a unique dataset of bilateral transportation costs between Chinese cities, digitized highway network maps, and firm-level census. I first derive and estimate a market access measure for cities in China from 1995 to 2005. I then examine the channels through which the highway infrastructure affected economic outcomes. The results suggest that highways promoted aggregate productivity growth by facilitating the entry of new firms and reallocation among existing firms. I estimate the aggregate economic impact of China's national highway system and find that eliminating all highways in China would decrease aggregate productivity by 3.2%. There is also evidence that the national highway system led to a sectoral reallocation between cities in China.

Keywords: Transport infrastructure; trade; highway; productivity; China (search for similar items in EconPapers)
JEL-codes: F10 H54 O18 O40 R10 (search for similar items in EconPapers)
Pages: 67 pages
Date: 2017-05-26
New Economics Papers: this item is included in nep-cna, nep-eff, nep-geo, nep-tra, nep-tre and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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