On the Road: Access to Transportation Infrastructure and Economic Growth in China

TLDR

This paper estimates the causal effect of access to transportation networks on regional economic outcomes in China over a twenty‑period rapid income growth era. The authors exploit the fact that transportation networks tend to connect historical cities and develop a simple theoretical framework with empirically testable predictions to address the endogenous placement of networks. The study finds that proximity to transportation networks has a moderate positive causal effect on per capita GDP levels across sectors but no effect on GDP growth, and that these results are consistent with factor mobility playing an important role in determining the economic benefits of infrastructure development.

Abstract

This paper estimates the effect of access to transportation networks on regional economic outcomes in China over a twenty-period of rapid income growth. It addresses the problem of the endogenous placement of networks by exploiting the fact that these networks tend to connect historical cities. Our results show that proximity to transportation networks have a moderate positive causal effect on per capita GDP levels across sectors, but no effect on per capita GDP growth. We provide a simple theoretical framework with empirically testable predictions to interpret our results. We argue that our results are consistent with factor mobility playing an important role in determining the economic benefits of infrastructure development.