A Study On Impacts Of Infrastructure On Regional Economic Growth In China

Based on data for 28 regions of China for the period 1990～2009, this dissertation empirically tests the impacts of infrastructure on regional economic growth in China.This study partially solves the problem of endogeneity in the previous studies by using system-GMM estimation, and the main conclusions is summarized as follows:(1)Many studies have shown that TFP growth is an important source of China's economic miracle (Worldbank,1997). Taking into account China's technological progress mainly depends on technology imports, rather than the independent innovation at the present stage. In order to investigate the impact of infrastructure on regional total factor productivity in China, this dissertation has selected FDI, foreign trade, human capital, urbanization and government expenditure and other control variables.The result indicates transport infrastructure has a significant positive effect on regional total factor productivity, while telecommunications infrastructure has a significant negative impact on the regional total factor productivity which may be related to "over-investment" in telecommunications infrastructure sector and regional competition. In addition, the impacts of human capital, trade and government expenditure on regional total factor productivity are also significant positive.(2)During the past 30 years, China's economic growth among different regions is quite unbanlanced.In the context of convergence theory, this dissertation tests the relationship between regional per capita income growth and initial economic conditions, physical capital, human capital, FDI, urbanization, government expenditure as well as transportation and telecommunications infrastructure.The regression results show that transport and telecommunications infrastructure has a significant positive effect on the region's per capita income growth from 1990～2009, That is, even after controlling for initial per capita real GDP, per capita real GDP growth and other factors.This study still get the robust estimates that traffic density and the telephone density has a significant positive impact on per capita real GDP growth rate. When using the first lagged value of traffic density and traffic density to regress, the result also indicates that their first order lagged term has the same significant effects on regional economic growth which shows that the impacts of transportation and telecommunications infrastructure on regional economic growth is not because of the "reverse causality" relation between them.(3) The return rate of investment in transport and telecommunications infrastructure is worth of attention. This study finds that the impact of transportation and telecommunications infrastructure on regional economic growth in China is subjected to the law of diminishing returns. In other words, the impacts of transportation and telecommunications infrastructure on economic growth is negatively related to their size. This suggests that various regions can gain more benefits from infrastructure investment in the early stages of development, Compared to the eastern coastal areas, the impacts of infrastructure investment on economic growth is even greater in the central and western regions. This result is consistent with some previous studies (Demurger,2001; Ding et al, 2008)(4) This research also finda that other evidence to support per capita income conditional convergence among regions in China. It shows that the regions with higher levels of per capita income has lower per capita income growth rate under the control of other factors that affects differences of per capita income in the steady state. Also, this study indicates that physical capital and human capital, foreign trade, FDI has significant positive effect on per capita income growth, while population growth has significant negative impact on per capita income growth among regions in China. This suggests that the central and western regions can achieve the goal of Catching- up with the eastern regions by increasing investment in physical capital and human capital, increasing openness attracting foreign direct investment, promoting market-oriented reforms and controlling population growth...